- Nov 9, 2003
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[moderator: this is from a subscription service or I would have posted a link]
Aviation Daily
United Nears Financing But Still Faces Multiple Hurdles
By Steve Lott
December 11, 2003
Within days of inking a $2 billion financing deal, United is still aiming to emerge from Chapter 11 bankruptcy protection even though it is juggling several issues including decisions on fleet size, its regional operation at Washington Dulles and municipal bond litigation.
John Tague, executive VP-customer, told reporters on the sidelines of a recent Star Alliance meeting that the "pace of which we are achieving a successful reorganization of the company is escalating." Sources said the company has reached a deal with JP Morgan and Citigroup to underwrite jointly the carrier's exit financing, which would be backed by a federal loan guarantee. The final papers could be signed by the end of the week.
Tague reported that the carrier still plans to file a "supplement" to its current loan guarantee application on file with the Air Transportation Stabilization Board (ATSB) "at some point in the near future." The refiling could come as soon as next week, sources said.
Tague said the company's business plan and preliminary plan of reorganization "has been favorably" received by the lending markets.
Once the carrier submits its updated business plan and application it expects to hear back from the ATSB within about 60 days of its submission. If the application gets the green light, United would then file a reorganization plan with the court and a disclosure statement.
Following these filings, United would then have the statutory periods for approval of the disclosure statement and for solicitation of votes from creditors and the holding of a confirmation hearing. After all those steps, Tague said the carrier "remains on track" to emerge "mid-next year," which executives say is in keeping with its early estimates of an 18-month process.
Among remaining reorganization issues is who will offer regional flights from its Washington Dulles hub. "We are determined to successfully resolve that, be it within the context of an arrangement with Atlantic Coast or in the event there is a successor management or company," Tague said. United has "very real plans" no matter what happens to ensure "seamless, uninterrupted service" out of Dulles.
Tague also said United has "accomplished the vast majority of ownership reset for our aircraft fleet," and the final sizing of the fleet will occur in the next 60-90 days. "There still remains some complex arrangements to be made particularly as it relates to aircraft that have public debt associated with them," he said.
Another open issue is the carrier's municipal bond obligations, "whose potential material impact on United's balance sheet and cash flow represents a major factor in our ability to exit," Tague said. United believes ground leases governing its airport facilities are independent of bond financing arrangements.
As a result, the municipal bond payments are unsecured pre-petition claims, which the law prohibits United from paying without court approval.
Tague said the bond issue will be "litigated in the course of the coming of weeks" with parties that believe the bond agreement and the lease deals are "inextricably linked."
[personnal note: best of luck to ya'll at UAL - hope you don't have to go through what we're going thru at U]
Aviation Daily
United Nears Financing But Still Faces Multiple Hurdles
By Steve Lott
December 11, 2003
Within days of inking a $2 billion financing deal, United is still aiming to emerge from Chapter 11 bankruptcy protection even though it is juggling several issues including decisions on fleet size, its regional operation at Washington Dulles and municipal bond litigation.
John Tague, executive VP-customer, told reporters on the sidelines of a recent Star Alliance meeting that the "pace of which we are achieving a successful reorganization of the company is escalating." Sources said the company has reached a deal with JP Morgan and Citigroup to underwrite jointly the carrier's exit financing, which would be backed by a federal loan guarantee. The final papers could be signed by the end of the week.
Tague reported that the carrier still plans to file a "supplement" to its current loan guarantee application on file with the Air Transportation Stabilization Board (ATSB) "at some point in the near future." The refiling could come as soon as next week, sources said.
Tague said the company's business plan and preliminary plan of reorganization "has been favorably" received by the lending markets.
Once the carrier submits its updated business plan and application it expects to hear back from the ATSB within about 60 days of its submission. If the application gets the green light, United would then file a reorganization plan with the court and a disclosure statement.
Following these filings, United would then have the statutory periods for approval of the disclosure statement and for solicitation of votes from creditors and the holding of a confirmation hearing. After all those steps, Tague said the carrier "remains on track" to emerge "mid-next year," which executives say is in keeping with its early estimates of an 18-month process.
Among remaining reorganization issues is who will offer regional flights from its Washington Dulles hub. "We are determined to successfully resolve that, be it within the context of an arrangement with Atlantic Coast or in the event there is a successor management or company," Tague said. United has "very real plans" no matter what happens to ensure "seamless, uninterrupted service" out of Dulles.
Tague also said United has "accomplished the vast majority of ownership reset for our aircraft fleet," and the final sizing of the fleet will occur in the next 60-90 days. "There still remains some complex arrangements to be made particularly as it relates to aircraft that have public debt associated with them," he said.
Another open issue is the carrier's municipal bond obligations, "whose potential material impact on United's balance sheet and cash flow represents a major factor in our ability to exit," Tague said. United believes ground leases governing its airport facilities are independent of bond financing arrangements.
As a result, the municipal bond payments are unsecured pre-petition claims, which the law prohibits United from paying without court approval.
Tague said the bond issue will be "litigated in the course of the coming of weeks" with parties that believe the bond agreement and the lease deals are "inextricably linked."
[personnal note: best of luck to ya'll at UAL - hope you don't have to go through what we're going thru at U]
