ClueByFour
Veteran
I've not checked, but I'm sure that is some kind of preferred stock, thus RSA is probably first in line at liquidation time.700UW said:
Us Airways Reports $177mm Q1 Loss
- Thread starter javaboy
- Start date
Clue:
Right, I was refering to their equity, which I also thought was a higher priority than other shareholders...
700UW:
Are you saying that RSA has a $75mil loan out to US Airways, in addition to its $240mil investment in 38% of the stock?
I would assume that $75mil loan would be lumped in with other unsecured debt (or other asset-backed loans, depending on the loan terms, since I do not know the agreement).
Also, I have not had a chance to listen to the conference call yet... I have read, however, that US Airways has around $1.6bil in cash, but $978mil unrestricted... which means $600mil+ in restricted cash... Seems high to me to have over 37% of cash restricted. I am not sure if this is unusual or not... Did they mention during the call why the cash is restricted? Typically some of it has to do with credit card processing reserves, but 37%+ seems unusually high to me.
Right, I was refering to their equity, which I also thought was a higher priority than other shareholders...
700UW:
Are you saying that RSA has a $75mil loan out to US Airways, in addition to its $240mil investment in 38% of the stock?
I would assume that $75mil loan would be lumped in with other unsecured debt (or other asset-backed loans, depending on the loan terms, since I do not know the agreement).
Also, I have not had a chance to listen to the conference call yet... I have read, however, that US Airways has around $1.6bil in cash, but $978mil unrestricted... which means $600mil+ in restricted cash... Seems high to me to have over 37% of cash restricted. I am not sure if this is unusual or not... Did they mention during the call why the cash is restricted? Typically some of it has to do with credit card processing reserves, but 37%+ seems unusually high to me.
700UW:
700UW said: "RSA only has $75 million risk for thier portion of the $100 million that was not underwritten by the ATSB."
USA320Pilot comments: Under the agreement, US Airways prepaid $250 million, causing the remaining outstanding loan balance to be reduced to $726 million. The prepayment has been made to the lenders on a prorated basis to both the ATSB guaranteed (90 percent) and non-guaranteed (10 percent) portions of the loan. The ATSB’s exposure therefore was reduced by $225 million, and Bank of America and Retirement Systems of Alabama received $6.25 million and $18.75 million, respectively, which reduced their at risk portion of the loans.
Thus, RSA's at risk portion of the loan is now about $68.25 million.
Regards,
USA320Pilot
700UW said: "RSA only has $75 million risk for thier portion of the $100 million that was not underwritten by the ATSB."
USA320Pilot comments: Under the agreement, US Airways prepaid $250 million, causing the remaining outstanding loan balance to be reduced to $726 million. The prepayment has been made to the lenders on a prorated basis to both the ATSB guaranteed (90 percent) and non-guaranteed (10 percent) portions of the loan. The ATSB’s exposure therefore was reduced by $225 million, and Bank of America and Retirement Systems of Alabama received $6.25 million and $18.75 million, respectively, which reduced their at risk portion of the loans.
Thus, RSA's at risk portion of the loan is now about $68.25 million.
Regards,
USA320Pilot
RSA lent $75 million and Bank of America lent $25 million of the non-underwritten loan for a total of $100 million.
ATSB gauranted only $900 million the other $100 came from the listed above.
320, I did not know who got paid down what, I just posted the original amounts.
ATSB gauranted only $900 million the other $100 came from the listed above.
320, I did not know who got paid down what, I just posted the original amounts.
Owner
Class A common Stock
RSA - 41.83%
OCM Principal Opportunities, Aviation Acquisition & Goldman Sachs - 8.97%
ATSB - 12.77%
The ATSB Securities Trust Beneficiary owns 7,635,000 shares of Class A Common Stock through its ownership of 7,635,000 warrants.
Regards,
USA320Pilot
Class A common Stock
RSA - 41.83%
OCM Principal Opportunities, Aviation Acquisition & Goldman Sachs - 8.97%
ATSB - 12.77%
The ATSB Securities Trust Beneficiary owns 7,635,000 shares of Class A Common Stock through its ownership of 7,635,000 warrants.
Regards,
USA320Pilot
700UW & Funguy2:
700UW’s comments about the original at risk portion of the loan is accurate.
RSA’s US Airways exposure is above $600 million, $240 million in equity, $68.75 million in at risk loans, and about $300 million in mainline aircraft debt/EETCs.
Respectfully,
USA320Pilot
700UW’s comments about the original at risk portion of the loan is accurate.
RSA’s US Airways exposure is above $600 million, $240 million in equity, $68.75 million in at risk loans, and about $300 million in mainline aircraft debt/EETCs.
Respectfully,
USA320Pilot
BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
- 5,865
Clue,
If memory serves(???), RSA holds at least 2 classes of stock. One gives them voting control - something like 6 votes per share. Whether they are prefered or class B, I just don't remember off the top of my head.
Wasn't RSA one of two tranche B lenders (the $100M not guaranteed)? Seems like BofA may have been the other one. I think their $75M loan was reduced by the same overall percentage as the rest.
Jim
If memory serves(???), RSA holds at least 2 classes of stock. One gives them voting control - something like 6 votes per share. Whether they are prefered or class B, I just don't remember off the top of my head.
Wasn't RSA one of two tranche B lenders (the $100M not guaranteed)? Seems like BofA may have been the other one. I think their $75M loan was reduced by the same overall percentage as the rest.
Jim
In this particular case, your colleague was (possibly only partially) incorrect. The pre-payment (and renegotiation of the loan covenants) was made because the company actually would have been in default of the covenants otherwise. The original terms stated that the company would have been in violation of the covenants if the independent auditor's report contained a paragraph expressing "doubt about its ability to continue as a going concern." When it became clear that KPMG would reach this conclusion as a result of its audit, the company was forced to renegotiate the loan covenants before being technically in violation on March 12.USA320Pilot said:
RSA is first in line for what's left if they have preferred shares; I don't know that a liquidation of the company would provide enough money to pay off all the other creditors in line behind the ATSB.
I'd add that in light of the fact that RSA holds roughly $300 million in EETC's secured by US Airways aircraft, the pension fund's investment in UAIR made some sense as a means of ensuring the value of that investment. They also stand to make a decent return on their 75% portion of the guaranteed loan.
USA320PilotUSA320Pilot said:
WARRANTS DO NOT EQUAL STOCK
If US Airways declares bankruptcy today, the federal government's equity (stock) holding in US Airways is ZERO. I am not sure how to make it any more clear.
Warrants are the right to future purchases of stock under certain conditions, and usually within a set time frame. One such condition is called a "strike price", a price the stock needs to trade at before the warrant may be exersized. Converting the warrants to stock is called "exercising the warrants". The warrants may or may not be exercised. If and when the warranrts are exerised, UAIR will issue new stock at that time and dillution will occur. For the purpose of calculating earnings per share, etc, the dilution is factored in for the purpose of not distorting the future potential.
To my knowledge, no ATSB warrants (for any airline) have been exercised.
The federal government prefers to sell the warrants to investors, generally, rather than exercise them, as the feds don't want to appear partial to one company due to an ownership stake. Thus, when conditions to exercise the warrants are favorable, the ATSB will sell them to investors, who will then exercise them. (This is based on the model of the Chrysler bailout.)
Therefore, ATSB does not own any US Airways equity. ATSB will most likey never own any US Airways equity.
How many times do we need to review this?
On a fully diluted basis, you may be correct. On an actual outstanding share basis, you are not correct.
Back to the topic.
So, it looks like RSA invested $315mil to protect $300mil in EETC. Now, if the whole thing goes belly up, they are likely to not lose the whole $615mil... The aircraft backed securities are probably worth 1/2 to 3/4 of the original amount (flood the market with used aircraft and the value of those aircraft declines), + they are among the first in line on the $240mil in equity, and somewhere else in line on the $68mil unsecured portion of the ATSB loan.
At the end of the day, RSA will likely lose a small portion of its investment in UAIR, as they have made sure the lion's share of their investment is backed by assets or at the top of the BK list.
Restricted cash includes things like workers' comp premiums, trust fund taxes collected from employees (FICA and federal income tax), monies held for payment of municipal bond debt, etc. While the percentage is high, I believe that AMR's restricted cash in March 2003 (at AMR's worst hour) exceeded 37% of total cash.funguy2 said:
Thanks FWAAA... very informative.
These all sound like things that, If Chapter 7 occured today, UAIR would likely have to pay-off these items. In otherwords, they seem unlike to recover any of the restricted amounts based on what they are. Although, again, I am no expert... Just what it seems like to me.
These all sound like things that, If Chapter 7 occured today, UAIR would likely have to pay-off these items. In otherwords, they seem unlike to recover any of the restricted amounts based on what they are. Although, again, I am no expert... Just what it seems like to me.
BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
- 5,865
funguy2,
I agree, but this is what the company put in the proxy materials:
" The ATSB Securities Trust beneficially owns 7,635,000 shares of Class A Common Stock through its ownership of 7,635,000 Warrants. As disclosed above, the Warrants are issued with a corresponding number of shares of Class A Preferred Stock, which has voting rights. The ATSB Securities Trust holds 7,635,000 shares of Class A Preferred Stock, which must be surrendered upon exercise of the Warrants. The Warrants have an exercise price of $7.42 per share and are immediately exercisable."
Jim
I agree, but this is what the company put in the proxy materials:
" The ATSB Securities Trust beneficially owns 7,635,000 shares of Class A Common Stock through its ownership of 7,635,000 Warrants. As disclosed above, the Warrants are issued with a corresponding number of shares of Class A Preferred Stock, which has voting rights. The ATSB Securities Trust holds 7,635,000 shares of Class A Preferred Stock, which must be surrendered upon exercise of the Warrants. The Warrants have an exercise price of $7.42 per share and are immediately exercisable."
Jim
Boeing Boy... Thanks for the quote and source. It is worded kind of odd, "beneficially owns" is the standout statement.
Regardless, the warrants are what they are. Until exercised, The US Government has no real ownership. Once these warrants are exercised, the resulting stock comes with voting rights... fine... But those voting rights come with the stock, not the warrants. Besides, the ATSB already has some effective control via the guaranteed loan.
Furthermore, if the strike price is $7.42 as stated, the governement cannot excercise until shares trade for $7.42 or more. The higher the stock goes, the more valuable the warrant. Close today was $2.62, and $7.50 hasn't been seen since last December.
If the government could have, they should have exercised when the stock was $30/share... Would have been a $170mil profit. However, there was probably a 1 yr or 6 month restriction, thus they have only recently become exercisable. Or maybe they renogotiated the time restriction on the warrants when the loan pre-payment was made? I don't really know.
However, this is a illustration of where USA320Pilot repeats something he heard/read/saw/whatever without really knowing the full implications of what it really means. Or maybe its even purposefully omitting things to make his point (which seems to be the nature of the U/UAL merger quote "according to one industry source" which he keeps omitting the second half of the statement where the source says the deal is dead).
This makes me wonder about the other things not said, when USA320Pilot says anything. For example, "with or without the employees"... what does that really mean... what are the conditions attached... "without" the employees could mean asset sales rather than outsourcing, but that is either left out or unknown... USA320Pilot IMPLIES outsourcing, but never quotes anyone as saying so, just sticks to "with or without the employees" or "10% ownership" or "UCT/ICT" or whatever vague expression he goes with... I am beginning to wander off-topic, but I think you get the point.
Regardless, the warrants are what they are. Until exercised, The US Government has no real ownership. Once these warrants are exercised, the resulting stock comes with voting rights... fine... But those voting rights come with the stock, not the warrants. Besides, the ATSB already has some effective control via the guaranteed loan.
Furthermore, if the strike price is $7.42 as stated, the governement cannot excercise until shares trade for $7.42 or more. The higher the stock goes, the more valuable the warrant. Close today was $2.62, and $7.50 hasn't been seen since last December.
If the government could have, they should have exercised when the stock was $30/share... Would have been a $170mil profit. However, there was probably a 1 yr or 6 month restriction, thus they have only recently become exercisable. Or maybe they renogotiated the time restriction on the warrants when the loan pre-payment was made? I don't really know.
However, this is a illustration of where USA320Pilot repeats something he heard/read/saw/whatever without really knowing the full implications of what it really means. Or maybe its even purposefully omitting things to make his point (which seems to be the nature of the U/UAL merger quote "according to one industry source" which he keeps omitting the second half of the statement where the source says the deal is dead).
This makes me wonder about the other things not said, when USA320Pilot says anything. For example, "with or without the employees"... what does that really mean... what are the conditions attached... "without" the employees could mean asset sales rather than outsourcing, but that is either left out or unknown... USA320Pilot IMPLIES outsourcing, but never quotes anyone as saying so, just sticks to "with or without the employees" or "10% ownership" or "UCT/ICT" or whatever vague expression he goes with... I am beginning to wander off-topic, but I think you get the point.
PITbull
Veteran
MMW,MarkMyWords said:
You are on the right track and can most definitely see the forest through the trees. The Company had no choice but to fully disclose in the 10K report. The$511 million dollars of operating revenue spent towards purchasing RJs has created much of the losses shown for 2003. If the RJ buying would have been postponed, U would have reported an approx $50 million profit. We also have the same amount of CASH in the bank we did in Dec. of 2001 even with the $250million buy down of the ATSB.
We are not as bad off as managment and the "stake holders" and Jerry Glass want labor to believe.
All we need is time to turn the company around and the wheels are already in motion.
Just because SW is coming to town, does not mean we as labor hand over our contracts and concede to management demands. Everyone must work a little harder to compete. Competition has always been "the beast" in the airline business and we have always competed and sustained ourselves through the turbulance.
Hang in their folks. Tell management to " Keep it real".
