Alabama retirement fund wants more!

zonecontroller

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Sep 3, 2002
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Alabama retirement fund renegotiating US Airways deal
12/04/2002
Associated Press
Alabama''s pension fund is renegotiating its offer to buy a 38 percent share of US Airways for $240 million.
David Bronner, CEO of the Retirement Systems of Alabama, met with airline officials Wednesday in Montgomery. We are re-trading the deal.
*************We want more, he said.*****************
US Airways accepted the pension fund''s offer in September. No other suitors made higher offers, so the bankrupt airline recently started moving forward with plans for RSA to acquire a 38 percent share.
Bronner told a state pension panel Wednesday that the original offer included RSA controlling five of the 13 seats on the US Airways board of directors. Now, he said, he wants seven. Also, he said he either wants to reduce the $240 million investment, get preferred stock or take some other step to improve the deal.
It''s all in flux. We''ll know a lot in the next few weeks, Bronner said.
That''s because US Airways has to file a revised reorganization plan with the bankruptcy court this month.
The airline announced Nov. 26 that it was seeking more concessions from its unions before filing its reorganization plan. It also announced that 2,500 more employees would be furloughed during the next three months.
US Airways had 49,000 employees before the terrorist attacks on Sept. 11, 2001. Now it is down to 35,000.
 

usfliboi

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Aug 20, 2002
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I say tell me bronner to stick it and say bye!!! & board seats??????? Please! Hes gonna become part of the problem yet! However hes not gonna be able to renegoiate! A contract is a contract!
 

usfliboi

Veteran
Aug 20, 2002
2,070
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I say tell me bronner to stick it and say bye!!! & board seats??????? Please! Hes gonna become part of the problem yet! However hes not gonna be able to renegoiate! A contract is a contract!
 
A contract is a contract, but only when there's actually a contract....

[blockquote]
USAirways Press Release on Nov 18:

The formal selection of RSA as the equity sponsor for US Airways’ reorganization has been endorsed by the Committee of Unsecured Creditors appointed by the Court to represent the interests of creditors during the reorganization. The RSA investment is subject to customary conditions to closing, as well as the company’s achievement of certain financial and operational benchmarks.

As previously announced in September, RSA agreed to invest $240 million for approximately 37.5 percent ownership interest in the restructured US Airways. This percentage of equity ownership is subject to change based upon definitive agreements in the final plan of reorganization. RSA has underwritten a $500 million debtor-in-possession (DIP) financing facility. So far, the airline has drawn $300 million on the $500 million DIP loan. The remaining $200 million can be accessed when US Airways meets certain remaining stipulations for a $900 million federal guarantee of a $1 billion loan, which has been given conditional approval by the Air Transportation Stabilization Board (ATSB). RSA also continues to hold approximately $340 million of debt obligations related to US Airways’ aircraft.
[/blockquote]

I'm not a lawyer, but my guess is that the fact that the words "definitive agreements" in the press release indicate that there isn't a final contract with RSA yet, so yes, it looks like they can indeed ask for more...

It looks like the ATSB conditions aren't close to being met yet, and if RSA doesn't like the numbers as they stand, they it don't have to release the final $200M in DIP. By asking for more (be it a larger equity stake or more board seats), they may be willing to release the final $200M before the ATSB conditions are met.

Without that, US Airways could very easily run out of DIP. And cash.

That's more or less how Pan Am died. They burned thru the initial DIP financing provided by DL, and when it came time for DL to provide the next installment, DL said no. And when you're out of cash in Ch.11, there aren't many options left other than liquidation...
 
A contract is a contract, but only when there's actually a contract....

[blockquote]
USAirways Press Release on Nov 18:

The formal selection of RSA as the equity sponsor for US Airways’ reorganization has been endorsed by the Committee of Unsecured Creditors appointed by the Court to represent the interests of creditors during the reorganization. The RSA investment is subject to customary conditions to closing, as well as the company’s achievement of certain financial and operational benchmarks.

As previously announced in September, RSA agreed to invest $240 million for approximately 37.5 percent ownership interest in the restructured US Airways. This percentage of equity ownership is subject to change based upon definitive agreements in the final plan of reorganization. RSA has underwritten a $500 million debtor-in-possession (DIP) financing facility. So far, the airline has drawn $300 million on the $500 million DIP loan. The remaining $200 million can be accessed when US Airways meets certain remaining stipulations for a $900 million federal guarantee of a $1 billion loan, which has been given conditional approval by the Air Transportation Stabilization Board (ATSB). RSA also continues to hold approximately $340 million of debt obligations related to US Airways’ aircraft.
[/blockquote]

I'm not a lawyer, but my guess is that the fact that the words "definitive agreements" in the press release indicate that there isn't a final contract with RSA yet, so yes, it looks like they can indeed ask for more...

It looks like the ATSB conditions aren't close to being met yet, and if RSA doesn't like the numbers as they stand, they it don't have to release the final $200M in DIP. By asking for more (be it a larger equity stake or more board seats), they may be willing to release the final $200M before the ATSB conditions are met.

Without that, US Airways could very easily run out of DIP. And cash.

That's more or less how Pan Am died. They burned thru the initial DIP financing provided by DL, and when it came time for DL to provide the next installment, DL said no. And when you're out of cash in Ch.11, there aren't many options left other than liquidation...
 

ITRADE

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Aug 19, 2002
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Yawn.....[BR][BR]I think somebody finally shook Bronner's head a little bit and the guy finally realized that airlines are not quite the bundles of cash that he envisioned them to be - especially with a war on the horizon.
 

ITRADE

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Aug 19, 2002
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DCA/IAD US2
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Yawn.....[BR][BR]I think somebody finally shook Bronner's head a little bit and the guy finally realized that airlines are not quite the bundles of cash that he envisioned them to be - especially with a war on the horizon.
 
C

chipmunn

Guest
In my opinion, RSA and the PBGC are the drivers here and both are concerned about their US investment/liability. Bronner has gone on record as saying he is concerned about war in the Middle East and it appears he is the hammer to get more cost cuts and the company has talked about pension "distressed terminations"[BR]. [BR]Could this be why Bronner told the AP he would like to "take some other step to improve the deal"?[BR][BR]Or now has Bronner opened the door for TPG to re-enter the picture?[BR][BR]Regardless, US keeps taking strategic steps to improve the airline such as the new Ireland service and the updated Midway agreement. With more cuts that will likely come one way or another, the airline will lower its unit costs to be more competitive in the future.[BR][BR]Chip
 
C

chipmunn

Guest
In my opinion, RSA and the PBGC are the drivers here and both are concerned about their US investment/liability. Bronner has gone on record as saying he is concerned about war in the Middle East and it appears he is the hammer to get more cost cuts and the company has talked about pension "distressed terminations"[BR]. [BR]Could this be why Bronner told the AP he would like to "take some other step to improve the deal"?[BR][BR]Or now has Bronner opened the door for TPG to re-enter the picture?[BR][BR]Regardless, US keeps taking strategic steps to improve the airline such as the new Ireland service and the updated Midway agreement. With more cuts that will likely come one way or another, the airline will lower its unit costs to be more competitive in the future.[BR][BR]Chip
 

ForkTime2002

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Nov 27, 2002
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www.usaviation.com
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/4/2002 10:24:49 PM chipmunn wrote:[BR][BR]Regardless, US keeps taking strategic steps to improve the airline such as the new Ireland service and the updated Midway agreement. With more cuts that will likely come one way or another, the airline will lower its unit costs to be more competitive in the future.[BR][BR]Chip----------------[BR][BR][STRONG][FONT face="Times New Roman" size=3]The updated Midway agreement? hahahahah,yeah okay.[BR]that one rj they may or may not get flying for us will help![BR]Ireland? hey vacation fares notorious for their high yields!Way to go!![BR]lowering unit costs while eviscerating the morale !(what little remains)[BR][BR]mr.friendly has a bat hes going to bash us over the head with unless he gets his way and now bubba wants to control the board, yeah thatll work well.[/FONT][/STRONG][/BLOCKQUOTE]
 

ForkTime2002

Advanced
Nov 27, 2002
110
0
www.usaviation.com
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/4/2002 10:24:49 PM chipmunn wrote:[BR][BR]Regardless, US keeps taking strategic steps to improve the airline such as the new Ireland service and the updated Midway agreement. With more cuts that will likely come one way or another, the airline will lower its unit costs to be more competitive in the future.[BR][BR]Chip----------------[BR][BR][STRONG][FONT face="Times New Roman" size=3]The updated Midway agreement? hahahahah,yeah okay.[BR]that one rj they may or may not get flying for us will help![BR]Ireland? hey vacation fares notorious for their high yields!Way to go!![BR]lowering unit costs while eviscerating the morale !(what little remains)[BR][BR]mr.friendly has a bat hes going to bash us over the head with unless he gets his way and now bubba wants to control the board, yeah thatll work well.[/FONT][/STRONG][/BLOCKQUOTE]
 

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