United Airlines (UAL) Discloses 28M Share Equity Distribution Agreement

United Airlines (NASDAQ: UAL) disclosed:

On June 15, 2020, United Airlines Holdings, Inc. (“UAL”) entered into an equity distribution agreement (the “Distribution Agreement”) with Citigroup Global Markets Inc., BofA Securities, Inc. and J.P. Morgan Securities LLC (collectively, the “Managers”), relating to the issuance and sale from time to time by UAL (the “ATM Offering”), through the Managers, of up to 28,000,000 shares of UAL’s common stock, par value $0.01 per share (the “Shares”). Sales of the Shares, if any, under the Distribution Agreement may be made in any transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). Under the terms of the Distribution Agreement, UAL may also sell Shares to any Manager, as principal for its own account, at a price agreed upon at the time of sale. If UAL sells Shares to a Manager as principal, UAL will enter into a separate terms agreement with such Manager.

The Distribution Agreement includes customary representations, warranties and covenants by UAL and customary obligations of the parties and termination provisions. The Company has agreed to indemnify the Managers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Managers may be required to make with respect to any of those liabilities. Under the terms of the Distribution Agreement, UAL will pay the Managers a commission of up to 1% of the gross sales price of any Shares sold.

The Shares to be sold under the Distribution Agreement, if any, will be issued and sold pursuant to the prospectus forming a part of UAL’s shelf registration statement on Form S-3 (File No. 333-221865), which became effective upon filing by the Company with the Securities and Exchange Commission (the “SEC”) on December 1, 2017, and a prospectus supplement dated June 15, 2020 related thereto. UAL plans to use the net proceeds from any sales pursuant to the Distribution Agreement for general corporate purposes. The net proceeds from any sales pursuant to the Distribution Agreement are not included in the calculation of the amount of total available liquidity that the Company previously disclosed that it expects at the end of the third quarter of 2020.

The offering of common stock pursuant to the Distribution Agreement will terminate upon the earliest of (1) the sale of all common stock subject to the Distribution Agreement, (2) the termination of the Distribution Agreement by UAL or by any of the Managers, with respect to such Manager only or (3) June 30, 2022.

The foregoing description of the Distribution Agreement is not complete and is qualified in its entirety by reference to the full text of the Distribution Agreement, a copy of which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated in this Item 1.01 by reference. In connection with the ATM Offering, Sidley Austin LLP provided the Company with the legal opinion attached to this Current Report on Form 8-K as Exhibit 5.1.

The Managers and their related entities have engaged, and may in the future engage, in commercial and investment banking transactions with UAL in the ordinary course of their business. They have received, and expect to receive, customary compensation and expense reimbursement for these commercial and investment banking transactions.

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