No surprise here:[BR][BR][A href=http://biz.yahoo.com/bw/021202/22497_1.html]http://biz.yahoo.com/bw/021202/22497_1.html[/A][BR][BR]But here''s a line that caught me off guard:[BR][BR]United Airlines (NYSE:[A href=http://finance.yahoo.com/q?s=ual&d=t]UAL[/A] - [A href=http://biz.yahoo.com/n/u/ual.html]News[/A]) announced that it will be relying on the grace periods included in certain debt obligations due to be repaid today, including $375 million in enhanced equipment trust certificates (EETC) and [STRONG]the approximately $500 million owed to Kreditanstalt fur Wiederaufbau (KfW), which is due today as a result of the failure to meet all of the conditions to a further extension of the repayment obligation[/STRONG].[BR][BR]Anyone know what happened with the refinancing of this debt?
UAL defers debt....
- Thread starter DLFlyer31
- Start date
I thought they successfully refinanced the Kreditanstalt fur Wiederaufbau debt. Was this a typo?
Also...any word on the refinancing with the aircrafter lenders?
Also...any word on the refinancing with the aircrafter lenders?
Cosmo
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- Aug 20, 2002
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Seems pretty simple, actually -- the long-term KfW refinancing was dependent upon UA getting all of the labor agreements ratified by 12/1/02. When that didn't happen, thanks to the mechanics' rejection of their agreement, the refinancing went away. So now UA has $920 million due immediately ($375 million plus $500 million plus $45 million in smaller debt obligations), which would basically wipe out UA's cash if these obligations were paid in full today. This virtually guarantees a bankruptcy filing prior to 12/16/02 without the IAM ratification of the revised agreement.
Perhaps NOW the mechanics will understand how critical UA's situation has become, and they will therefore act in their own best interest. That shouldn't be too much to ask of them.
Perhaps NOW the mechanics will understand how critical UA's situation has become, and they will therefore act in their own best interest. That shouldn't be too much to ask of them.
[blockquote]
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On 12/2/2002 4
32 PM DLFlyer31 wrote:
But here's a line that caught me off guard:
"United Airlines (NYSE:[A href="http://finance.yahoo.com/q?s=ual&d=t"]UAL[/A] - [A href="http://biz.yahoo.com/n/u/ual.html"]News[/A]) announced that it will be relying on the grace periods included in certain debt obligations due to be repaid today, including $375 million in enhanced equipment trust certificates (EETC) and [STRONG]the approximately $500 million owed to Kreditanstalt fur Wiederaufbau (KfW), which is due today as a result of the failure to meet all of the conditions to a further extension of the repayment obligation[/STRONG]."
Anyone know what happened with the refinancing of this debt?
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[/blockquote]
Although that debt was refinanced, apparently thw refinancing was subject to certain conditions. According the this statement, all of those conditions were not met. One of those conditions might have been cost concessions from all employee groups, or perhaps concessions from other lenders, or both of those factors, and/or some other items we know nothing about.
Anyway, that $500 mil apparently has a 7 day grace period for part of the loan and a 10 day grace period for the other part. Which DEFINITELY means that if UAL does not get the loan guarantee within about a week, they'll file.
On another website, I predicted (before the no vote by the mechanics was announced) that the ATSB would give a decision between Dec 2. and Dec. 9. I think it's obvious now that if the mechanics vote no this Thursday, UAL will file either on Friday or more likely over the weekend.
-synchronicity
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On 12/2/2002 4
32 PM DLFlyer31 wrote: But here's a line that caught me off guard:
"United Airlines (NYSE:[A href="http://finance.yahoo.com/q?s=ual&d=t"]UAL[/A] - [A href="http://biz.yahoo.com/n/u/ual.html"]News[/A]) announced that it will be relying on the grace periods included in certain debt obligations due to be repaid today, including $375 million in enhanced equipment trust certificates (EETC) and [STRONG]the approximately $500 million owed to Kreditanstalt fur Wiederaufbau (KfW), which is due today as a result of the failure to meet all of the conditions to a further extension of the repayment obligation[/STRONG]."
Anyone know what happened with the refinancing of this debt?
----------------
[/blockquote]
Although that debt was refinanced, apparently thw refinancing was subject to certain conditions. According the this statement, all of those conditions were not met. One of those conditions might have been cost concessions from all employee groups, or perhaps concessions from other lenders, or both of those factors, and/or some other items we know nothing about.
Anyway, that $500 mil apparently has a 7 day grace period for part of the loan and a 10 day grace period for the other part. Which DEFINITELY means that if UAL does not get the loan guarantee within about a week, they'll file.
On another website, I predicted (before the no vote by the mechanics was announced) that the ATSB would give a decision between Dec 2. and Dec. 9. I think it's obvious now that if the mechanics vote no this Thursday, UAL will file either on Friday or more likely over the weekend.
-synchronicity
Do you think if the concessions are met (IAM votes yes) that the debt will then be deferred again?
Cosmo
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- Aug 20, 2002
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I would guess that the KfW refinancing will be reinstated once the mechanics' agreement is ratified. IMHO, this action by the bank just adds more pressure for a "yes" vote, because with over $900 million in debt payments due NOW, a "no" vote could propel United into bankruptcy by the end of this week. And I don't think that the mechanics will get a 3rd chance to vote.
Does anyone know for sure that UA is in default, of the KW loan, because of the Labor agreement? If this is true then the grace period (for the KW loan) started last Thursday (Friday if Holidays are not included). The way the press release is written the clause the triggered the default was not paying the Dec. 2 Bonds. My guess is that UA would have to pay that bill to clear the KW default.
Cosmo
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- Aug 20, 2002
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It appears that I have wrongly attributed the reinstatement of the KfW Bank debt payment to the mechanics' rejection of their agreement when, in fact, it was based on something else. I was stating my opinion when I didn't have all of the facts. My bad!
According to today's Washington Post, the KfW debt was reinstated because of a cross-default clause that was activated when United did not make its scheduled payment yesterday on the $375 million EETC debt. As I understand it, if United pays off the EETC debt, then the cross-default is cured and the $500 million KfW debt once again will be postponed and eventually become due in 2007.
Of course, the mechanics' upcoming vote to ratify their agreement is one link in the chain of events necessary to enable United to make the EETC payment and thus avoid a bankruptcy filing.
According to today's Washington Post, the KfW debt was reinstated because of a cross-default clause that was activated when United did not make its scheduled payment yesterday on the $375 million EETC debt. As I understand it, if United pays off the EETC debt, then the cross-default is cured and the $500 million KfW debt once again will be postponed and eventually become due in 2007.
Of course, the mechanics' upcoming vote to ratify their agreement is one link in the chain of events necessary to enable United to make the EETC payment and thus avoid a bankruptcy filing.
Most articles seem to say that UAL has 10 days to find the money. A businesswire article dated Dec2 says that 300mill of the KW loan has a 7 calendar day grace period. That means by Sun(or is it Mon) UAL will have to pay 300mill to KW or the 375mil EETC bonds. If the ATSB is waiting for the IAM to vote then that will mean a very busy weekend for some people. If the timing is the same as last week the IAM results will come in appox 1am on Friday. ATSB to give results Friday or Saturday at the latest. Then the money will in the bank just in time to pay the debt. That is cutting it pretty close. Holly said last week that she was surprised at the lack news on DIP financing. I hope that has changed just in case things don't go as planned.
Anyone think that UA has already lined up lenders as part of the ATSB loan?
If the ATSB grants approval conditioned on the IAM approving the re-vote, could UA then pull the trigger and get an immediate loan?
I would think that other than the outcome of the re-vote, the ATSB has everything they need at this point to make a decision. If this is the case...when will they rule?
If they announced today or tomorrow approval conditioned on the IAM vote...that would add pressure for the IAM to approve.
If they announced today or tomorrow rejection of the loan, the re-vote would a moot point...UA would file as soon as they finalize the DIP financing.
Perhaps a decision will be forthcoming now that it appears UA is very close to lining up the $1.5B DIP financing. Once the i's are dotted and t's crossed on the DIP...they're free to file CH11.
While the power of Speaker Hastert on UA's side speaks volumes in Washington...obviously he can't make the board approve the loan. However, I'm sure he has influenced them to the point that they are being blunt with UA officials.
Who knows anymore.
Sorry for the ramble.
If the ATSB grants approval conditioned on the IAM approving the re-vote, could UA then pull the trigger and get an immediate loan?
I would think that other than the outcome of the re-vote, the ATSB has everything they need at this point to make a decision. If this is the case...when will they rule?
If they announced today or tomorrow approval conditioned on the IAM vote...that would add pressure for the IAM to approve.
If they announced today or tomorrow rejection of the loan, the re-vote would a moot point...UA would file as soon as they finalize the DIP financing.
Perhaps a decision will be forthcoming now that it appears UA is very close to lining up the $1.5B DIP financing. Once the i's are dotted and t's crossed on the DIP...they're free to file CH11.
While the power of Speaker Hastert on UA's side speaks volumes in Washington...obviously he can't make the board approve the loan. However, I'm sure he has influenced them to the point that they are being blunt with UA officials.
Who knows anymore.
Sorry for the ramble.
