This is off of another board...the source isn't cited, that I can see.
14 More Planes in Danger of the Repo-Man
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WILMINGTON, Del. (Dow Jones)--United Airlines parent UAL Corp. (UALAQ) has set a hearing Monday on an emergency motion for authority to start the process of buying senior debt on some of its aircraft in a $293 million transaction.
The move would head off possible repossession of 14 aircraft and allow United Airlines to complete the restructuring of a 1997 deal to finance the planes.
Junior debt is already in the hands of the airline, which said in court papers filed Thursday and obtained by Dow Jones Newswires Friday that it "desires to take charge of its own destiny" as it gets ready to exit bankruptcy protection. [ 05-08-05 1554GMT ]
United Airlines said in a press release Tuesday that it plans to file the disclosure statement outlining its reorganization strategy in about a month.
Filing of the plan disclosure statement is the start of the confirmation process that could bring the Chapter 11 case that began in December 2002 to conclusion.
In court papers, United Airlines says it has an automatic right to buy the senior debt on the aircraft, giving it the upper hand in refinancing them.
Three years of talks with representatives of the debt holders have led most recently to the airline's decision to withdraw an offer to pay holders of the debt retroactive interest higher than the rate called for in deal documents, the company's lawyers said in court documents.
JPMorgan Chase Bank has agreed to ultimately fund the purchase by way of a refinancing, but United Airlines has to get control of the debt first, in order to offer the aircraft as security for the loan the bank has agreed to make, according to the documents.
In order to move before Aug. 15 to keep the banks from repossessing the planes, United Airlines plans to use its own funds to make the initial debt buy, before refinancing with JPMorgan.
In addition to the debt buy, the airline will be in bankruptcy court Monday asking permission to pay the lender about $1.5 million in initial fees on the loan. [ 05-08-05 1555GMT ]
The purchase to be discussed Monday in an Illinois bankruptcy courtroom is the second phase of a deal approved July 27 by U.S. Bankruptcy Judge Eugene R. Wedoff.
The judge allowed United Airlines to buy the junior debt connected to the 1997-1 EETC transaction to finance the plans.
With the junior debt in hand, United Airlines is entitled to get the senior debt as soon as it pays the purchase price, the company said in court documents.
The eventual refinancing through JPMorgan will allow United Airlines to cut the cost of owning the planes, court documents say.
