dashtrasher
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Reuters
US Airways, GE Capital Agree to Deal
Friday January 3, 2:58 pm ET
NEW YORK (Reuters) - US Airways (OTC BB:UAWGQ.OB - News) has reached a settlement with its largest creditor, General Electric Co.'s (NYSE:GE - News) GE Capital Corp. unit, that would give the bankrupt airline another infusion of emergency financing, a court filing said.
The agreement would also hand GE a stake in the carrier once it emerges from bankruptcy,
GE Capital will provide up to $120 million in financing to help US Airways run its business during bankruptcy if the airline's bankruptcy court judge, Stephen Mitchell, approves the deal.
The Retirement Systems of Alabama, the airline's main investor, has already pledged $500 million in such financing.
The GE financing arm would also set up $360 million in funding for the airline once it finishes its reorganization, and it would provide another $350 million of equity to start up leases on regional jets US Airways wants to add to its fleet.
In exchange, GE Capital will receive 3.8 million shares of preferred stock and warrants to buy up to a 5 percent stake in Arlington, Virginia-based US Airways once it emerges from bankruptcy.
The Retirement Systems of Alabama is set to receive more than a 36 percent stake in the airline as part of its reorganization plan, while US Airways' workers will be given a 38 percent stake.
US Airways said in a Dec. 27 court filing that GE Capital, which was involved in the financing of 111 of the airline's airplanes before it filed for bankruptcy, was one of only a few financial firms that could offer a substantial amount of financing for the purchase of regional jets.
US Airways has staked much of its plan to revive its business on increased use of regional jets, which are smaller and cheaper and can help pull in profits in less-populated markets that are too small to fill larger airplanes.
The first portion of GE Capital's loan facility to US Airways would be drawn down on January 27 to help keep the airline's operations running, US Airways said in the filing.
The airline said GE Capital will provide it with funding after it exits bankruptcy based on several conditions. US Airways must emerge from bankruptcy by July 1 to receive the additional funding and avoid defaulting on its bankruptcy financing agreements.
GE Capital will also amend the credit it has already extended to US Airways, by pushing back the facility's maturity date and changing other terms of the agreement. To cut US Airways' costs further, the financing firm will amend terms of some of its aircraft leases and allow it to reject leases on some jets.
US Airways, GE Capital Agree to Deal
Friday January 3, 2:58 pm ET
NEW YORK (Reuters) - US Airways (OTC BB:UAWGQ.OB - News) has reached a settlement with its largest creditor, General Electric Co.'s (NYSE:GE - News) GE Capital Corp. unit, that would give the bankrupt airline another infusion of emergency financing, a court filing said.
The agreement would also hand GE a stake in the carrier once it emerges from bankruptcy,
GE Capital will provide up to $120 million in financing to help US Airways run its business during bankruptcy if the airline's bankruptcy court judge, Stephen Mitchell, approves the deal.
The Retirement Systems of Alabama, the airline's main investor, has already pledged $500 million in such financing.
The GE financing arm would also set up $360 million in funding for the airline once it finishes its reorganization, and it would provide another $350 million of equity to start up leases on regional jets US Airways wants to add to its fleet.
In exchange, GE Capital will receive 3.8 million shares of preferred stock and warrants to buy up to a 5 percent stake in Arlington, Virginia-based US Airways once it emerges from bankruptcy.
The Retirement Systems of Alabama is set to receive more than a 36 percent stake in the airline as part of its reorganization plan, while US Airways' workers will be given a 38 percent stake.
US Airways said in a Dec. 27 court filing that GE Capital, which was involved in the financing of 111 of the airline's airplanes before it filed for bankruptcy, was one of only a few financial firms that could offer a substantial amount of financing for the purchase of regional jets.
US Airways has staked much of its plan to revive its business on increased use of regional jets, which are smaller and cheaper and can help pull in profits in less-populated markets that are too small to fill larger airplanes.
The first portion of GE Capital's loan facility to US Airways would be drawn down on January 27 to help keep the airline's operations running, US Airways said in the filing.
The airline said GE Capital will provide it with funding after it exits bankruptcy based on several conditions. US Airways must emerge from bankruptcy by July 1 to receive the additional funding and avoid defaulting on its bankruptcy financing agreements.
GE Capital will also amend the credit it has already extended to US Airways, by pushing back the facility's maturity date and changing other terms of the agreement. To cut US Airways' costs further, the financing firm will amend terms of some of its aircraft leases and allow it to reject leases on some jets.
