US, GECAS agree to return of $36.6M of Nov payment to the airline



[P][SPAN class=t][FONT face=Times New Roman size=3][STRONG]US, GECAS Agree To Return of $36.6M of Nov Payment to the airline[/STRONG][/FONT][/SPAN][/P]
[P][SPAN class=t][FONT face=Times New Roman size=3]WASHINGTON (Dow Jones)--US Airways Group Inc. is asking a bankruptcy court to approve an agreement under which a unit of General Electric Co. (NYSE:[/FONT][A href=][FONT face=Times New Roman size=3]GE[/FONT][/A][FONT face=Times New Roman size=3] - [/FONT][A href=][FONT face=Times New Roman size=3]News[/FONT][/A][FONT face=Times New Roman size=3]) would return $36.6 million of a payment the airline made last month under a prepetition credit agreement. [/FONT][/P]
[P][FONT face=Times New Roman size=3]According to a motion filed with the court Thursday, US Airways around Nov. 18 made a scheduled principal amortization payment of roughly $37.8 million to General Electric Capital Corp., as required under the credit agreement. [/FONT]
[P][FONT face=Times New Roman size=3]In November 2001, US Airways signed a credit agreement with General Electric Capital, a unit of General Electric. Under that pact, GE Capital agreed to loan the airline $404 million, which is secured by 11 Airbus aircraft, the engines on those planes, and some spare engines. [/FONT]
[P][FONT face=Times New Roman size=3]The motion said the airline and the General Electric entities have been involved in extensive negotiations prior to and following US Airways'' bankruptcy filing in connection with a restructuring of the airline''s debts to General Electric. The focus of those talks has been to reach a global settlement of all open issues between the parties. [/FONT]
[P][FONT face=Times New Roman size=3]As reported, General Electric Co. said in October that its exposure to US Airways and United Airlines , including loans, leases and guarantees and commitments under airline financing programs, is $4.4 billion. [/FONT]
[P][FONT face=Times New Roman size=3]When US Airways filed for bankruptcy Aug. 11, the outstanding principal amount of the prepetition credit facility was $389 million, according to the motion. [/FONT]
[P][FONT face=Times New Roman size=3]While a settlement hasn''t been finalized, the parties have recently signed a non-binding summary of terms and conditions. [/FONT]
[P][FONT face=Times New Roman size=3]One of those terms relates to the treatment of a November principal payment. In exchange for concessions US Airways would make under the global settlement, General Electric Capital has agreed to re-advance part of the amount of the November payment to the airline in two tranches. [/FONT]
[P][FONT face=Times New Roman size=3]The first tranche would be $18,320,000 and would be paid before year-end. The second tranche, of $18,283,802, would be paid in January 2003, subject to bankruptcy court approval of the settlement. [/FONT]
[P][FONT face=Times New Roman size=3]In exchange for the re-advancement, US Airways proposed to grant the General Electric entities an administrative expense claim as well as first-priority liens on the collateral that secures the 2001 loan agreement, according to the motion. [/FONT]
[P][FONT face=Times New Roman size=3]The airline is asking the U.S. Bankruptcy Court in Alexandria, Va., to approve the motion on an interim basis at a hearing Dec. 27. It asked the court to consider approval of a forthcoming global settlement at the airline''s Jan. 16, 2003, hearing. [/FONT]
[P][FONT face=Times New Roman size=3]The filing said that, subject to some conditions under the prepetition pact, the airline could have had the right to borrow $15 million on Nov. 15. However, the carrier didn''t satisfy the conditions and US Airways didn''t borrow the $15 million. [/FONT]
[P][FONT face=Times New Roman size=3]US Airways said that Retirement System of Alabama, the lender under its $500 million debtor-in-possession financing agreement, confirmed that the requested re-advancement is allowed under the DIP agreement. [/FONT]
[P][FONT face=Times New Roman size=3]On Nov. 7, the airline received final bankruptcy court approval of the $500 million DIP loan agreement with the Retirement System of Alabama. The lender, one of US Airways'' top creditors, has also agreed to invest $240 million in exchange for an equity stake in the reorganized airline. [/FONT]
[P][FONT face=Times New Roman size=3]US Airways Group listed about $7.81 billion in assets, $10.65 billion in liabilities and $8.3 billion in annual operating revenue when it filed for Chapter 11 protection.[/FONT][/P]