Summary of Today’s US Airways News

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chipmunn

Guest
The major differences between the TPG and RSA plans are:
 RSA will replace TPG, CSFB, and BOA as the debtor-in-possession DIP financier for the originally negotiated $500 million in financing. The initial plan from the three investors provided $75 million on August 11 with $175 scheduled for release today with the requirement of restructuring agreements complete with ALPA, AFA, & the IAM, for a total of $250 million. Today the bankruptcy court approved the immediate release of $300 from RSA, which is $50 million more than would have been available from TPG, CSFB, & BOA. Final approval of the DIP financing and the release of the remaining $200 million credit facility is set for the next omnibus court hearing scheduled for November 7.
 TPG will receive $2 million for expenses and has waived the $7 to $10 million break up fee. Also, Texas Pacific had the right to review any bids that were made and match them; RSA will not have that option.
 The MPC credit card clearing-house cash hold back has been reduced from $140 to $60 million.
 US Airways receives a 20 percent premium of $40 million over the TPG offer of $200 million in emergence financing. RSA will provide $240 million for a 37.5 percent versus TPG 38 percent of the company.
 US has already received court permission to reject 67 aircraft leases that includes 57 parked aircraft and 10 Boeings recently removed from service. Previously US asked the judge to reject up to 150 additional Boeing leases despite strong objections from 18 lessors. Today at the hearing it was revealed that the Seabury Group had settled 16 of those objections with the parties and Judge Mitchell said he would rule on the other two as soon as possible. A 60-day bankruptcy code deadline that makes it easier for the company to dispose of aircraft leases expires October 9.
 The most notable change is that RSA holds EETC’s on F-100s and 21 Boeing aircraft. RSA has agreed to restructure the Boeing lease agreements, which are part of the 150 jets US seeks to obtain relief on, to market rates. Reports indicate the company plans to operate the new fleet plan of 279 aircraft, but may reduce that number to 245 mainline jets if traffic does not come back to acceptable levels. RSA’s $340 million in US debt is backed by approximately 13 F-100s, and 21 Boeing aircraft that include B-737s and B-767s. Bronner said he expects US to retire the Fokker aircraft, which have already been rejected by the court and keep flying the Boeing planes. New market rate aircraft lease payments held by the pension fund will be determined in the bankruptcy process. Bronner said he is ready to accept the same lower rates that other lessors and lenders agree to.
 The new agreement contemplates that the US unsecured creditors would obtain at least 8.5 percent of the new equity issued upon emergence; however, per the bankruptcy code with a new bid being approved RSA will have 60 days to perform “due diligenceâ€￾, during which time other bidders could submit a bid to the court, but competing bidders must match or exceed the RSA agreement.
 RSA will have the same governance agreed to in the TPG MOU. Five of the 13 board seats would be held by the pension fund when the company emerges from bankruptcy. The remaining seats would be filled by the airline's CEO, two unsecured creditor representatives, one ALPA representative, one IAM representative, a representative designated by the other labor groups (AFA, CWA, & TWU) and two independent directors selected by Dave Siegel.
 The court approved the terms for a bidding process in order to allow US to consider better equity investment offers that must be equal to or greater than the RSA agreement. Under the terms of the bidding process put in place today, qualified bidders will be able to conduct due diligence at a US data room and attend management presentations beginning tomorrow, September 27 and continuing through mid-November. This will allow US to finalize its equity sponsor and file its Chapter 11 reorganization plan by year-end per the so called Fourth District Court “Rocket Docketâ€￾.
 According to Bloomberg News, “The good news is that the Texas Pacific people have terminated their interest as of now, Bronner said. That doesn't mean they won't reignite their interest. Indeed, Texas Pacific's statement left the door ajar. We will continue to watch the company's progress through Chapter 11 with interest, it said of US. But Siegel concurred that RSA's bid could be topped by another party, including Texas Pacific. I would not say they are out of the picture, Siegel said of Bonderman's interest.
 After emerging from Chapter 11, US “will become a real jewelâ€￾ because of reduced labor costs, rationalized fleet, and focus on regional routes, Bronner said before the fund reached the agreements with the airline. Bronner noted US is a better investment for the $24 billion Alabama Pension Fund than the stock or bond markets.
 
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chipmunn

Guest
Just one more point...reports indicate former UA president Rono Dutta advised RSA on the US credit facility and equity investor agreements.

Post emergence RSA will have US BOD super majority and will have Dutta as an advisor. Interesting. I wonder why RSA sought out a man who was president at UA just six weeks ago for this assignment?

Chip
 
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chipmunn

Guest
UAL777flyer:

UAL777flyer said: Maybe they sought him out because he needs a job and has a lot of expertise on US Airways from the due diligence done during the merger attempt. I don't think there is necessarily anything sinister about Dutta being a consultant to RSA.

Chip comments: UAL777flyer, you may be right and I agree with your thought, but it's another common denominator between the two companies.

Chip
 

DCAflyer

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Aug 27, 2002
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Chip reported:

RSA will have the same governance agreed to in the TPG MOU. Five of the 13 board seats would be held by the pension fund when the company emerges from bankruptcy. The remaining seats would be filled by the airline's CEO, two unsecured creditor representatives, one ALPA representative, one IAM representative, a representative designated by the other labor groups (AFA, CWA, & TWU) and two independent directors selected by Dave Siegel.

DCAflyer observes:

So Chip, it is safe to say that once we emerge from C11, the Wolfman will be off the property, barring Dave naming him to the new BOD. Of course, if Dave did that, he would completely lose credibility with labor. Is it too soon for us to be dancing on the tarmac at DCA? Do you think Dave might keep him on in some limited capacity such as facilitating a potential corporate transaction?
 

UAL777flyer

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Aug 20, 2002
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Chip,

Maybe they sought him out because he needs a job and has a lot of expertise on US Airways from the due diligence done during the merger attempt. I don't think there is necessarily anything sinister about Dutta being a consultant to RSA.
 
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chipmunn

Guest
Furloughedagain:

Furloughedagain asked: So if the RFA is restructuring some of the aircraft leases than is it reasonable to expect that some or all of the next 500 pilot furloughs will be cancelled?

Chip comments: Yes, but it's to early to tell.

Chip
 
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chipmunn

Guest
DCAFlyer:

DCAflyer asked: So Chip, it is safe to say that once we emerge from C11, the Wolfman will be off the property, barring Dave naming him to the new BOD. Of course, if Dave did that, he would completely lose credibility with labor. Is it too soon for us to be dancing on the tarmac at DCA? Do you think Dave might keep him on in some limited capacity such as facilitating a potential corporate transaction?

Chip comments: Dave's employment contract permitted him to recommend the replacements for the three retiring board members and prior to bankruptcy on May 1, 2003 Stephen Wolf was scheduled to retire from the board.

With the new agreement in place I assume those provisions remain, but will likely be accelerated with the board reconstituted through the bankruptcy process.

In regard to Wolf remaining as a consultant for maybe future M&A activity, that is a possibility and has been discussed before. Former executive vice president and general counsel Larry Nagin is currently a consultant. Nagin is likely providing continuity to his replacement Michelle Bryan, but Nagin now works at US long time legal firm of Skadden & Arps.

Skadden & Arps handled the antitrust and legal issues for the company during its last merger attempt with UA and its bankruptcy section, led by John Butler, Esq., is the led legal firm for the formal restructuring in front of the Fourth District Court.

It would not surprise me if both Wolf & Nagin's talents are retained on a consulting basis for any future M&A scenario that might occur, such as a unique corporate transaction.

Chip
 
Chip, you're really grasping at straws regarding Dutta.

Rono was shown the door as part of the deal Tilton negotiated for the CEO job, so in a very incestuous industry, the fact that he was brought in as a consultant is about as indicative of a US/UA merger as it would be for a US pilot being seen commuting to work in a UA jumpseat.

As a side note, I find it amusing to see you snuggling up to the Bronner deal, since last week you were calling him unqualified...
 

oldiebutgoody

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Aug 23, 2002
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[blockquote]
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On 9/27/2002 1:53:54 PM eolesen wrote:

Chip, you're really grasping at straws regarding Dutta.

Rono was shown the door as part of the deal Tilton negotiated for the CEO job, so in a very incestuous industry, the fact that he was brought in as a consultant is about as indicative of a US/UA merger as it would be for a US pilot being seen commuting to work in a UA jumpseat.

As a side note, I find it amusing to see you snuggling up to the Bronner deal, since last week you were calling him unqualified...
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[/blockquote]
I think that just about everyone was skeptical about the RSA's qualifications until it was explained by the company in their press release. I believe that Dave wanted TPG also, but saw that the judge and other creditors would not allow it, so he began dealing in earnest with RSA. If anything, I feel that the RSA may actually have the best interest of the company at heart. I didn't think that last week, when the prevalent thought was that RSA was only here to be a spoiler for the TPG deal. It ain't done yet! The south may rise again!
 
[blockquote]
On 9/27/2002 3:09:24 PM oldiebutgoody wrote:
I think that just about everyone was skeptical about the RSA's qualifications until it was explained by the company in their press release.
[/blockquote]

The only folks who were skeptical were those who assumed that David Bronner was a long lost relative of Andy Griffith or Jed Clampett...

Those who'd heard of the RSA before last week knew otherwise.