Sun Country and Allegiant Release Key Supplemental Disclosures and Updated Financial Forecasts Amidst Proposed Merger

MINNEAPOLIS, MN – Sun Country Airlines (NASDAQ: SNCY) and Allegiant Travel Company have released a detailed supplemental disclosure to their previously filed Joint Proxy Statement/Prospectus regarding their proposed merger. The disclosures, made via a Form 8-K, provide significant new information for shareholders, including updated management forecasts, expanded details on transaction background, and comprehensive financial analyses by advisors. The companies stress that these disclosures are voluntary and not an admission of any requirement to provide additional information, but are designed to address shareholder litigation and to ensure transparency as the merger process moves forward.

Key Points and Price-Sensitive Developments

• Voluntary Supplemental Disclosures: Both Sun Country and Allegiant have issued additional disclosures to preempt potential legal challenges around the adequacy of information provided to shareholders regarding the proposed merger. These disclosures are not an admission of materiality but are provided to mitigate litigation risk and ensure a smooth transaction process.
• Updated Background on Proposed Transactions: The companies clarified that, at the time of executing the merger agreement, Allegiant had not discussed specific post-closing employment or consulting arrangements with Sun Country management, except for Mr. Bricker’s potential role on the combined company board and as a special advisor. This may allay concerns about management conflicts of interest.
• New Management Financial Forecasts: Shareholders are provided with updated financial projections for both Allegiant and Sun Country. These include detailed forecasts of net income, operating revenue, adjusted EBITDAR, capital expenditures, and unlevered free cash flow through 2029. These figures are crucial for evaluating the merger’s potential value creation.
• Goldman Sachs and Barclays Financial Analyses: The disclosures include summaries of valuation analyses conducted by the companies’ financial advisors, including discounted cash flow (DCF) analyses, precedent transaction multiples, and premium paid analyses. Key parameters such as discount rates (9.5% to 10.5%), EV/NTM EBITDAR multiples (4.00x to 5.50x), and reference equity premiums (19%-43%) are explicitly disclosed.
• Explicit Shareholder Guidance: Investors are strongly encouraged to read the full registration statement and definitive joint proxy statement/prospectus, as these documents contain important information about the merger and are available on the SEC website and the companies’ investor relations portals.
• Forward-Looking Statements and Risks: The document includes robust cautionary language regarding forward-looking statements, including the potential benefits of the merger, expected synergies, and risks associated with execution, regulatory approval, and market conditions. Shareholders are directed to review risk factors in both companies’ SEC filings.

Detailed Financial Forecasts and Definitions

The report contains extensive tables summarizing the projected performance of both Allegiant and Sun Country under different scenarios. Highlights include:

• Net Income (Allegiant): Projected to rise from \$38 million in Q4 2025 to \$339 million in outer years.
• Operating Revenue: Allegiant expects operating revenue to reach \$3.7 billion in the forecast period.
• Adjusted EBITDAR: Defined as earnings before interest, taxes, depreciation, amortization, and aircraft rent expense. Allegiant forecasts adjusted EBITDAR of \$143 million in Q4 2025.
• Unlevered Free Cash Flow: Multiple definitions are provided, but generally calculated as Adjusted EBIT plus depreciation and amortization, less unlevered cash taxes, deferred heavy maintenance, capital expenditures, and changes in working capital.
• Sun Country Projections: Sun Country’s management forecasts are detailed for both October and December runs, with key figures for net income, adjusted EBITDAR, capital expenditures, and adjusted EPS (projected at \$0.95 for 2025E, reaching \$2.46 in later years).

The supplemental disclosures also clarify definitions for key non-GAAP measures, such as Adjusted EBIT, Adjusted Net Income, and Adjusted NOPAT, to ensure shareholders have consistent understanding when comparing financial data.

Comprehensive Valuation Analysis

The financial advisors’ analyses, as disclosed, include:

• Discounted Cash Flow (DCF) Analysis: Goldman Sachs applied discount rates of 9.5% to 10.5% using the mid-year convention to derive present values for Sun Country and the combined entity.
• Precedent Transaction Analysis: Barclays evaluated 11 comparable airline transactions, and Goldman Sachs reviewed 138 precedent U.S. airline transactions, finding a median acquisition premium of 29%.
• Premium Paid Analysis: Goldman Sachs applied a premium range of 19%-43% to Sun Country’s undisturbed closing price, yielding an implied equity value range of \$18.75 to \$22.55 per share.
• Future Share Price Analysis: The theoretical present value of Sun Country’s future share price, based on illustrative multiples, is calculated in the range of \$9.60 to \$20.40 per share.

Implications for Shareholders and Potential Share Price Impact

• Transparency and Litigation Risk: The voluntary nature of these disclosures is intended to mitigate litigation risk and may be seen as a positive for transaction certainty.
• Updated Financials: The detailed and updated management forecasts enable investors to more accurately assess the merits of the proposed merger and its impact on future earnings, cash flows, and valuation.
• Valuation Ranges: The explicit disclosure of valuation multiples, premiums, and DCF assumptions provides clarity for investors seeking to benchmark the merger consideration against market standards.
• Shareholder Voting and Regulatory Approvals: Investors are reminded that the merger remains subject to shareholder approval and regulatory review, both of which could alter the timing or terms of the transaction.

Company Signatories

The report was signed by Erin Rose Neale, Chief Legal Officer, Senior Vice President, and Corporate Secretary of Sun Country Airlines.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. The information summarized herein is based on the company’s official filings and supplemental disclosures made to the SEC. Investors are strongly urged to review the full registration statement, definitive joint proxy statement/prospectus, and all related SEC filings before making any investment decision regarding Sun Country Airlines, Allegiant, or the proposed merger. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

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