Ual, Lenders Seek Dip Some Waivers

[UnitedChicago]

Interesting news I just picked up. This would explain the recent non-core asset sales. Not sure at this point if this lowers the covenants that need to be met for the remainder of the case.

In any event - I think this is further evidence that progress is being made and prudent steps are being taken. The important part is that UA and the lenders agree and this has occured before.

--

UAL, Lenders Seek Crt OK Of Some Waivers Under DIP Loans

By NICHOLAS P. BRAUDE

WASHINGTON -- UAL Corp. (UALAQ), the parent of United Airlines, is asking the bankruptcy court overseeing its case to approve some waivers and amendments under the carrier's debtor-in-possession financing facilities and to pay amendment fees to the lenders.

In a motion filed with the court Wednesday and obtained by Dow Jones
Newswires, UAL said that it and its DIP lenders have recently amended the
credit facilities to document waivers of some alleged technical defaults. The
modifications are subject to bankruptcy court approval.

The U.S. Bankruptcy Court in Chicago has scheduled a hearing on
matter for Oct. 24. Interested parties may file objections through Friday.

The proposed amendments wouldn't change amounts available under the
DIP loans, and the court has previously approved similar amendments.

The Chicago court last December approved the company's $1.2 billion
DIP financing agreement with a group of lenders that includes J.P. Morgan
(JPM), Citigroup Inc. ©, Bank One Corp. (ONE) and CIT Group (CIT). The
court also approved a standalone $300 million term loan with Bank One N.A.

The motion Wednesday said that the lenders have agreed to UAL's
proposed sale of its stock in online travel services Orbitz and Hotwire. UAL
said in court papers that it intends to use proceeds from those sales to pay
down amounts due under the DIP financing.

Under the amended credit pacts, the lenders would consent to the
airline modifying service along any of its routes in connection with
discontinued service on its San Francisco-to-Taipei route, the motion said.

The modified DIP agreements also call for the lenders to consent to
restructuring some of UAL's existing debts and to payment of a deposit under
the airline's fuel supply agreement.

Among the fees UAL would have to pay to the lenders are an amendment
fee that wouldn't exceed $895,000 and a $500,000 total arrangement fee to
lenders JPMorgan Chase Bank and Citicorp USA Inc. UAL would pay a $300,000
amendment fee to Bank One, the motion said.

-By Nicholas P. Braude; Dow Jones Newswires; 202-862-1355;

nicholas.braude@dowjones.com
Updated October 15, 2003 2:48 p.m.

 

[USA320Pilot]

I'm not trying to be a know it all or smart aleck, but who first said on this website this would occur?

Furthermore, the pressure will intensify in November when the company must have a cumulative EBITDAR of $112 million, up from $46 million in December.

Part of the reason I have posted additional comments is that uninformed people have "shot the messenger" regarding the UCT, which there is even more reason to believe could occur in the future -- although I now understand the final format could change.

Nonetheless, I recognize this is not good news for some United parties and I do not want to enter into a debate about the difficult issues at hand.

Respectfully,

Chip

 

[Bear96]

I'm not trying to be a know it all or smart aleck, but who first said on this website this would occur?

Dunno, Chip, but it sure wasn't you.

Unless of course you can prove me wrong by pasting the original thread from you predicting that on Oct.15 UA would reach announce an agreement with its lenders about some waivers including agreements on the proposed Orbitz/Hotwire sale; modifying services in relation to discontinuing the SFO-TPE route; and a payment of deposit under the fuel supply agreement.

Funny but I don't remember you mentioning ANY of those details before. And I too have long thought UA would be in trouble meeting this fall and winter's DIP covenants and would be needing waivers on some of the loan terms from the lenders.

This is what I was getting at yesterday. We ask you to provide details of your predictions; you fail to do so and either promise to get back to us or claim you were sworn to secrecy; then when something happens you are here immediately trying to claim this is exactly what you predicted.

So, again, let's have some *details* of the UCT that you are predicting will unfold over the next few months. Get on record now, BEFORE they happen for a change!

 

[UnitedChicago]

-FACT: UA sells only a PORTION of Orbitz stake. Remaining stake valued at an estimated $176 million to $258 million. UA does not sell entire stake in Orbitz

-FACT: LHR slots traded with BA were NEVER PROFITABLE

-FACT: 767-200's for sale are circa 1982

-FACT: UA and DIP lenders AGREED to amendments and filed for approval JOINTLY

-FACT: Proposed amendments WOULDN'T CHANGE AMOUNTS AVAILABLE under the DIP loans, and the court HAS PREVIOUSLY APPROVED SIMILAR AMENDMENTS

-FACT: Not one component of any posts regarding UA asset sales or inability to obtain exit financing has EVER BEEN BACKED UP BY A FACT. Rather could be interpreted as RUMOR.

Just as a refresher...

Websters defines:

-FACT: something that has actual existence

-RUMOR: talk or opinion widely disseminated with no discernible source

 

[767jetz]

Hey UnitedChicago,

Let's not let facts stand in the way of a good UCT, or tabloid story for that matter! 😀

P.S.
Notice that someone now claims to "understand the final format could change." Sounds like a disclaimer, incase the UCT fails to make the jump from fantasy to reality.

 

[USA320Pilot]

767jetz & UnitedChicago:

Wall Street reports indicate tripping the DIP covenants may not a big deal unless the lenders call in the loan. Other Wall Street firms have been talking to J.P. Morgan, CIT Group, Citigroup, and Bank One and I understand the DIP financiers may be thrilled to grant waivers in exchange for additional fees.

However, this will increase the company's debt service and make a loan guarantee more difficult.

With Duane Woerth telling the US Airways MEC in "Open Session" on September 11 that the ATSB has increased their demands on United three times, it appears the DIP financing waiver news could be problematic.

Moreover, there is more reason to believe that the two biggest issues remain the pensions and exit financing. Apparently the word is the pension plans must be terminated without legislative relief and only then will exit financing be considered, provided United can prove to Fitch Rating the company can project a 7% profit margin in 7 years. In addition, I understand United chief executive officer Glenn Tilton knows the pensions must be terminated to emerge and the IRS waiver request is considered a long shot.

Finally, there is more reason to believe some form of a UCT will occur, although its final form is unclear.

Regards,

Chip

:blink:

 

[UnitedChicago]

Honestly folks,

I just almost fell off my chair reading a certain reply. It takes me back several months when i first started following some posts and made the analogy of Baghdad Bob. Thanks for the good laugh...

I need something to laugh about because the CUBS lost 🙁

It was a great season and WE TRUSTY DUSTY!

GO CUBS!

 

[UnitedChicago]

How about some more FACTS...

In a separate filing last Friday, UAL also sought permission to sell its entire stake of 16.5 million Hotwire shares to Barry Diller’s InteractiveCorp., which is acquiring Hotwire for $665 million. United said the share sale would be worth $85 million—a great return for UAL, which acquired the stock about three years ago in exchange for $3.8 million and “distressed air inventory,â€￾ or groups of seats on unfilled flights.

They didn't sell these shares because they had to - it's because diller aqcuired hotwire. What a frickin AMAZING RETURN! THEY MADE $81.2 MILLION!

Now I feel a bit better.

 

[Ukridge]

UnitedChicago and others. Check your PM.

 

[novaqt]

Ukridge, United Chicago and 767jetz, check your PM's

 

[UnitedChicago]

UK and Nova got your PM's. I only debate facts so count me in!

 

[UnitedChicago]

Speaking of factual information. 2,200% return! Also, other airlines are selling their stakes.

UAL to sell Hotwire for $85M
United would get 2,200% return on its investment
By David Kesmodel, Rocky Mountain News
October 16, 2003

UAL Corp. said it is poised to make about $85 million from the planned sale of its stake in Hotwire.com - a whopping 2,200 percent return on its $3.78 million investment.

United Airlines' parent made the disclosure in a bankruptcy-court filing released Wednesday. The proceeds would come in handy by helping the giant carrier repay part of its bankruptcy loans.

The stock sale would occur through the purchase of online travel agency Hotwire by InterActiveCorp, a deal announced Sept. 22.

InterActiveCorp, controlled by entertainment industry executive Barry Diller, plans to buy closely held Hotwire for $665 million in cash and assume $20 million in options and warrants. The companies expect the deal to close by year's end.

American Airlines, Northwest Airlines, US Airways and other founders of San Francisco-based Hotwire are selling their stakes.

 

[Fly]

Got the PM.....I'm in!!! B)

 

[RowUnderDCA]

Guys-


Help me out with the bankruptcy process.

Is it true that these assets being sold by UAL were assets held prior to bankruptcy?

If so, isn't it true that the 'stiffed' creditors (or credtors likely to be stiffed) have a claim on these assets?

Is UAL selling these assets in order to pay-off post-bankruptcy creditors so that they get a pass on possibly missing some financial requirements of the DIP loan? (no sarcasm, just a question.)

If that is true, when will the pre-bankruptcy creditors say 'enough?'

Does it matter if they say 'enough?'

Isn't it more likely, that as the general environment for the airline industry improves, that creditors would prefer to get UAL's assets now, instead of waiting till later? Or is that calculation pretty unlikely to happen?

Please forgive me, because I have little facility with the small-picture details, but more ability to understand big-picture stuff. I have NO CLUE as to when or even if creditors will start squawking. It's just helpful to get an idea of the over-arching influences on this process. I'm not interested in who said what to whom.

 

[RowUnderDCA]

Here's my mental model I'm using for trying to understand this:

Bankruptcy is like walking a tight rope. Except you have some predictable and unpredictable forces pulling on both ends of your 'balancing pole' (which has a name I think!)

Anyway, U got through bankruptcy by running across the span and making a headlong leap to the other end.

UAL is taking tiny step by tiny step, hoping a gust of wind won't come but otherwise calculating very carefully what's likely to happen with every step.

This concludes today's lesson in 'airline bankruptcy for dummies'