LCC Files Automatic Shelf Registration on Form S-3

USA320Pilot

Veteran
May 18, 2003
8,175
1,539
www.usaviation.com
LCC Files Automatic Shelf Registration on Form S-3 - October 4, 2006

TEMPE (USNewsNow) - Today, US Airways filed an Automatic Registration Statement on Form S-3 with the Securities and Exchange Commission (SEC) that registers the sale of certain securities for up to three years. Registering securities on this type of registration statement is commonly referred to as a Shelf Registration. Before we go into the specifics about US Airways, it is important to know what a shelf registration is, how it works, and why a company would file one.

What is a Shelf Registration?

First, in order for a company to sell ANY type of security (be it, common stock, preferred stock, options, warrants, debt instruments, etc.) to the public, those securities must first be registered with the SEC. This rule comes from the Securities Act of 1933, which requires companies to disclose important information about the company, the securities being offered, the management team, and audited financial statements to protect the investing public.

A shelf registration is the term used under the SEC’s rules that allow companies that meet certain requirements to register securities for sale at any time over a three-year period without having to file additional registration statements with each specific offering. With the registration “on the shelf,â€￾ the corporation has the flexibility to act quickly when the market conditions are right, and thus avoid the timing delays that filing a registration often have (several weeks). The key rationale behind a shelf registration is that it gives a company the flexibility to sell securities to the public at a time of the company’s choosing, without having to go through a lengthy registration process, where market conditions can change quickly. It is not uncommon for a company to file a shelf registration when there is no current need for additional capital.

As discussed above, US Airways filed what is called an Automatic Registration Statement on Form S-3, which can only be filed by “Well Known Seasoned Issuersâ€￾ (WKSI). This type of shelf registration statement typically includes a variety of security types (common stock, debt, warrants, etc.), which the company can then sell to the public at a time of its choosing. Another key benefit of this variety of filing is that the company does not have to designate a dollar amount until it decides to sell the securities to the public. At that point, the company would be required to file a prospectus that would provide specific details on the type of security that it intends to issue and the dollar amount to be raised.

Why did we do it?

As we all know, the airline industry is quite volatile and market conditions can change significantly - literally overnight. The flexibility that a shelf registration statement provides is a way to mitigate some of the timing risk that companies are faced with when they need to quickly raise additional capital. Taking these considerations into account, our management team wanted the flexibility that a shelf registration provides. This not only makes sense for US Airways, but it also made sense for American Airlines (filed August 2006), Continental Airlines (filed April 2006), and JetBlue (filed June 2006).

Regards,

USA320Pilot