Delta's Stock Warrants for RJET

[FlyingDawg]

Some previous posts have mentioned Delta's rights as it relates to the Republic Airways Holdings IPO (RJET).

The IPO offering is for 5,000,000 shares and a total of 25,000,000 will be outstanding after the offering.

Delta has the following warrant rights based on info derived from Delta's 2003 Annual Report and Republic Airways Holdings Prospectus.

1) Warrant to purchase up to 1.5 million shares @ $12.50/share.
2) Warrant to purchase up to 1.5 million shares @ 95% of IPO price.
3) Right to purchase up to 5% of IPO shares (or 250,000 shares) equal to IPO price.
4) Right to purchase up to 60,000 shares/aircraft above the original 22 aircraft (or 1,020,000 shares given 39 aircraft will be operated by Chautauqua by the end of 2004 and an additional 780,000 shares with the recent 13 aircraft awarded).
5) Warrant to purchase 720,000 shares @ 12.50 (if exercised prior to IPO) or the IPO price (if exercised with or after the IPO).
6)Warrant to purchase 300,000 shares @ $18.00 (if exercised prior to IPO) or 95% of IPO price (if exercised with or after the IPO).

In summary Delta could control 6,070,000 of 25,000,000 outstanding shares. Thats a tad over 24% interest in Republic Airways Holdings.

The Chautauqua contract carrier agreement expires in 2012.

What all this means for Delta, Chautauqua or any of the other DCI carriers is anyones guess. I'm just trying to correct some incorrect information from some earlier post.

 

[storminpilot]

So does this mean that USAirways, American and United now own the other pieces of Republic?

 

[FlyingDawg]

American has some conditional warrants but the most they could exercise is 1,312,500 shares. This terminates if they terminate the codeshare. that a tad over 5% ownership.

America West still has rights to 175,000 shares even with the termination of their codeshare. That equal less than 1%.

US Air ways has no rights to any stock warrants.

Unsure if United was offered any in their codeshare agreement . That info would be available in their annual report.

 

[vc10]

When Delta exercises a warrant, a new share is created. Therefore, if Delta exercises 5,000,000 warrants, 5,000,000 new shares are created.

Therefore, Delta would actually have a smaller proportion of the ownership because the sharebase would increase by the number of warrants Delta exercised.

If they exercised them all (and assuming you are correct in the number of other shares, post-IPO, being 25,000,000) then Delta would control 6,070,000 of 31,070,000 shares---or around 19% (if I've done the math correctly).