SkyWest Had Made Hostile $3.50/Share Bid For ExpressJet

[SuperKooter]

The Sec website is a wonderful thing.

go to
http://searchwww.sec.gov/EDGARFSClient/jsp/EDGAR_MainAccess.jsp

Type in the Expressjet Ticker Symbol and look at the first few links. There are some letters between a few CEOs you may find interesting.

 

[USCtrojan]

The ego would hurt.

I understand this completely. Delta sold us off, and SkyWest Inc. didn't do squat for 2 years. Life got worse and worse as we saw our bases close. We settled a Contract and SkyWest started sending some boys over from St. George. Life has gotten and is getting better. These guys can run an airline. Nothing will happen at first. I don't have a good crystal ball, but I believe this would be a great thing for XJT. XJT is a strong company and needs cash. SkyW Inc. can get it to you and grow as a result -- all around.

Trojan

 

[BoilerUP]

shamelessly stolen from APC

April 7, 2008

Mr. James B. Ream
Chief Executive Officer and President
ExpressJet Holdings, Inc.
700 North Sam Houston Parkway, Suite 200
Houston, TX 77067


Mr. George R. Bravante, Jr.
Chairman
ExpressJet Holdings, Inc.
700 North Sam Houston Parkway, Suite 200
Houston, TX 77067




Dear Jim and George:

We understand that SkyWest, Inc. (“SkyWest”) has delivered to you an offer to acquire ExpressJet Holdings, Inc. (“ExpressJet”). In connection with your consideration of such offer, we wanted to inform you of our understanding with SkyWest regarding a new capacity purchase agreement (“CPA”) and our intentions regarding our existing contractual relationship.

First, we confirm that we have negotiated a new CPA with SkyWest, which would become effective if SkyWest is successful in acquiring ExpressJet (which, in turn, is subject to due diligence, among other things), and that we would consent to the change of control that would occur upon such an acquisition.

Second, absent our entering into a new CPA with savings of the magnitude we have negotiated with SkyWest, we currently expect to deliver to ExpressJet on June 28, 2008, a notice to withdraw 51 of the existing 205 Covered Aircraft from the current CPA, beginning in December 2009. Further, although we have the right to terminate the existing CPA at any time, we currently anticipate we will not extend the term of the current CPA (which we must do, if at all, by December 31, 2008), and thus the current CPA would simply expire in accordance with its terms beginning on December 31, 2010, with the expectation that all aircraft would be removed from the current CPA by the end of 2012.

We hope this information is helpful to you.

Sincerely,

Jeffrey J. Misner
Executive Vice-President and Chief Financial Officer
Continental Airlines, Inc.

 

[SuperKooter]

looks like its a go

 

[joe_pilot]

The Sec website is a wonderful thing.

go to
http://searchwww.sec.gov/EDGARFSClient/jsp/EDGAR_MainAccess.jsp

Type in the Expressjet Ticker Symbol and look at the first few links. There are some letters between a few CEOs you may find interesting.

Ok Kooter, am I imagining it or was CAL saying to XJT that SKYW will be providing lift for them (CAL) in 2009 whether or not XJT agreed to the purchase??

I think that first letter might have said that. BTW, why did you remove the text of the letters?

 

[Andy Neill]

Could anyone enlighten us as to what the impact of deleting pages pages 223 through 226 of the CBA from the XJET ALPA contract would be? Does that pertain to merged seniority?

 

[joe_pilot]

XJT stock up 54.07% at 3.22

 

[joe_pilot]

Kooter, do you know about the deleted pages in XJT's pilot contract?

 

[Sedona16]

7700 strong. ALPA ASA/XJet starts a single list petition. A vote for representation (if ALPA wins or not I do not care). ONE LIST, relative seniority, and good fences.

I know there was an ealier caution on absolute statements but Jerry will NEVER combine these groups. He can get his cost savings combining other parts of the company but it is much better and gives him more control over the pilots to keep them separate. There is nothing to be gained by current skywest pilots from buying another regional and keeping it separate. Perhaps skywest pilots will get a few extra rj's but overall its whipsaw. Did anybodies schedule/pay get better at skywest after they bought asa? Btw, guess what money they keep using to buy these other companies. You help raise it and they drain it to fund what will only benefit corporate.

 

[Erlanger]

April 7, 2008​

Mr. James B. Ream
Chief Executive Officer and President
ExpressJet Holdings, Inc.
700 North Sam Houston Parkway, Suite 200
Houston, Texas 77067

Mr. George R. Bravante, Jr.
Chairman
ExpressJet Holdings, Inc.
700 North Sam Houston Parkway, Suite 200
Houston, Texas 77067

Dear Jim and George:
I enjoyed speaking with each of you by phone earlier today regarding this letter. On behalf of the Board of Directors of SkyWest, Inc., I am writing to express our interest in acquiring ExpressJet Holdings, Inc. (“ExpressJet”) and to make a proposal for such a transaction. This transaction would represent a compelling combination and excellent strategic fit for our companies, and create superior value for our respective stockholders.
We are prepared to acquire all of the outstanding shares of ExpressJet common stock at a purchase price of $3.50 per share in cash. This represents a significant 59% premium over ExpressJet’s closing price today and a 63% premium over ExpressJet’s average closing price for the last 30 days. We believe that $3.50 per share is a full and fair price for ExpressJet’s common stock and provides an attractive opportunity for your stockholders to maximize the value of their investment in ExpressJet. This transaction would not be subject to a financing condition or approval by our stockholders. We would finance the purchase price with existing cash on hand and, if appropriate, other readily available financing.
We have negotiated a new capacity purchase agreement with Continental Airlines, Inc., which will become effective upon satisfactory completion of due diligence and consummation of the proposed transaction. In connection with that agreement, Continental would consent to the change of control that would occur upon the consummation of the proposed transaction. For your information, Continental has informed us that they are not in discussions with any other carrier regarding a Capacity Purchase Agreement.
We believe that our proposal would be in the best interests of ExpressJet and its stockholders, particularly given the uncertainty in the airline sector, the high price of oil and, as outlined in your public filings, the risks of your business related to your relationship with Continental. We also believe that our proposal would be beneficial to other ExpressJet constituencies. Additionally, we believe our proposal is compelling given your current cash burn rate and the need to satisfy the redemption of approximately $130 million of convertible notes this summer.
We have engaged Raymond James as our financial advisor and Parr Waddoups and Skadden Arps as legal counsel to advise us in this transaction. We and our advisors are ready to meet with you and your advisors at any time to discuss all aspects of our proposal and to answer any questions you or they may have about the proposal.
This proposal is subject to reaching a mutually satisfactory definitive acquisition agreement, our completion of due diligence, the completion by Continental of due diligence and final approval of the transaction and Capacity Purchase Agreement by our Board of Directors. We would like to commence the due diligence and negotiation of an acquisition agreement as soon as possible. Given our familiarity with your business and the industry, we are confident that once our management team and legal and financial advisors are given access to ExpressJet’s books and records, they will be able to complete their due diligence on an expeditious and accelerated basis. Continental will coordinate its due diligence efforts with you.
This proposal is also conditioned upon ExpressJet obtaining a clarification and/or amendment, satisfactory to us, to the collective bargaining agreement (the “CBA”) between ExpressJet Airlines, Inc. and the pilots in the service of ExpressJet Airlines, as represented by the Air Line Pilots Association, International (“ALPA”), dated December 1, 2004. First, we need clarification that nothing in the CBA (including, but not limited to, Section 1.D.3) would obligate us to merge the operations of ExpressJet Airlines with those of any or all of our currently-owned airline subsidiaries, or any airline subsidiaries we may acquire in the future, or otherwise apply to us or any of our subsidiaries or affiliates (other than ExpressJet and its subsidiaries). Secondly, we need the agreement of ALPA that the certain undated letter among ExpressJet, XJT Holdings, Inc., ALPA and the ExpressJet MEC, appended as pages 223 through 226 of the CBA, shall be revoked and deemed null and void, prior to the conclusion of the acquisition.
To effect this transaction, we and a newly-formed wholly owned subsidiary would enter into a definitive acquisition agreement with ExpressJet. Assuming that the conditions relating to the amendment of ExpressJet’s CBA discussed in the preceding paragraph has been fulfilled, we would be prepared to structure the transaction as a first-step tender offer followed by a second-step acquisition. The tender offer would be conditioned on the tender of a majority of the fully-diluted shares of ExpressJet’s common stock, the receipt of all necessary regulatory approvals, the absence of a material adverse change and other customary conditions. In order to allow for a second-step “short form” acquisition, we also would anticipate receiving a customary “top up option” to purchase an amount of ExpressJet common stock that, when added to the number of shares owned by SkyWest at the time of exercise of the option, constitutes one share more than 90% of the fully diluted shares of ExpressJet common stock. We and our legal counsel have completed a preliminary review of the transaction in light of regulatory approvals and do not foresee any impediments to the completion of the transaction.
Subject to events as they may develop, and depending upon ExpressJet’s response to our proposal, we hope to be able to discuss this with you and your Board on a non-public basis. We ask that you advise us of any plan by you to make our proposal public prior to doing so.
We hope you share our enthusiasm for the proposed transaction and we look forward to hearing from you. Please contact me as promptly as possible to discuss how we may best proceed, and in any event, please respond by next Monday, April 14th.
Sincerely yours,


Jerry C. Atkin
Chairman and Chief Executive Officer
SkyWest, Inc.



1) Continental also wants this to happen.
2) No merger of the pilots with either Skywest or ASA.
3) Note the dates on this letter.

 

[Speedtape]

I understand this completely. Delta sold us off, and SkyWest Inc. didn't do squat for 2 years. Life got worse and worse as we saw our bases close. We settled a Contract and SkyWest started sending some boys over from St. George. Life has gotten and is getting better. These guys can run an airline. Nothing will happen at first. I don't have a good crystal ball, but I believe this would be a great thing for XJT. XJT is a strong company and needs cash. SkyW Inc. can get it to you and grow as a result -- all around.

Trojan

And, don't forget, we did not have a contract during those first 2 years. After that was settled, everything changed!

 

[BoilerUP]

Could anyone enlighten us as to what the impact of deleting pages pages 223 through 226 of the CBA from the XJET ALPA contract would be?

Captain Mark Leneski, Chairman
ExpressJet Airlines MEC
3808 World Houston Parkway
Houston, TX 77032

Re: Holding Company Obligations

Dear Captains Woerth and Leneski,

This letter will confirm the commitments and obligations of ExpressJet Holdings, Inc. and XJT Holdings, Inc. (hereinafter referred to as “Holdings”) with respect to any and all flying performed by Holdings or any of its affiliates utilizing aircraft greater than 19 passenger seats and whose pilots are covered by the Railway Labor Act (“RLA”).

Holdings and the Air Line Pilots Association (“Association” or “ALPA”) agree as follows:

1. Any and all flying performed by or for Holdings or any affiliate of Holdings under a code sharing agreement or capacity purchase agreement
between Continental Airlines, Inc. (“Continental”) and Holdings or any of its affiliates (the “Continental Capacity Purchase Agreement”) utilizing aircraft with greater than 19 passenger seats will be performed by ExpressJet Airlines, Inc. (“ExpressJet” or “Company”) under the terms of
the Agreement between ExpressJet Airlines, Inc. and ALPA dated December 1, 2004 (“Agreement”).

2. If Holdings creates or establishes an air carrier, including through an existing or new affiliate, Holdings will ensure that this air carrier recognizes ALPA as the representative of its pilots consistent with the RLA, that the air carrier adopts a collective bargaining agreement identical to the Agreement and that all flying by or for the air carrier will
be performed by pilots on the ExpressJet Pilot Seniority List (the “Pilots’ Seniority List”). Filling of vacancy and displacement rights for such pilots
at the new air carrier will be established by mutual agreement between ALPA, ExpressJet and the new air carrier, provided that if an agreement is
not executed within 30 days from the date the affiliate was created or established, the parties shall jointly submit outstanding issues on the
filling of vacancies and displacement rights to expedited binding arbitration.

3. As a material and irrevocable condition of entering into an agreement for the acquisition or control of an air carrier or affiliate of an air carrier that operates pursuant to any code sharing, capacity purchase, special prorate or similar agreement providing feed flying for another carrier (“Code Share Agreement”), Holdings will ensure that, subsequent to the acquisition:

a. The acquired air carrier does not enter into any new Code Share Agreement unless the Code Share Agreement(s) in existence at the time of the acquisition is terminated by the acquired air
carrier’s Code Share Agreement partner;

b. ExpressJet and the acquired air carrier accept and implement an integrated pilot seniority list produced pursuant to:
(i) ALPA Merger Policy, if the pilots of the acquired air carrier are represented by the Association or
(ii) Section 3 and 13 of the Allegheny-Mohawk Labor Protective Provisions, if the pilots of the acquired air carrier are not represented by the Association for the purpose of the filling of vacancies and establishing displacement rights between the air carriers, provided that implementation of the integrated seniority list does not result in substantially greater costs to either airline;

c. If the acquired air carrier’s pilots are not represented by a labor organization, the acquired air carrier agrees to the provisions for
filling of vacancies and displacement rights between the air carriers as negotiated and agreed to by the Association and ExpressJet for pilots at both airlines, provided that if an agreement is not executed within 30 days from the date of
acquisition of the acquired air carrier, the Association and ExpressJet shall jointly submit outstanding issues on the filling of vacancies and displacement rights to expedited binding arbitration;

d. In the event the Association attempts to organize the pilots of an acquired air carrier whose pilots are not represented by a labor organization, the acquired air carrier will take a position of neutrality regarding representation of its pilots and will provide ALPA access to its pilots for organizing purposes and recognize ALPA as the bargaining representative pursuant to a certified card check consistent with the RLA;

e. If the acquired air carrier’s pilots are represented by a labor organization other than the Association, ExpressJet and the acquired air carrier agree to the provisions for filling of vacancies and displacement rights as negotiated and agreed to by ExpressJet, the acquired air carrier, ALPA and the other labor
organization; provided that if an agreement is not executed within 30 days from the date of acquisition of the acquired carrier, ExpressJet, the acquired air carrier, ALPA and the other labor
organization shall jointly submit outstanding issues on the filling of vacancies and displacements rights to binding arbitration;

f. If the acquired air carrier’s pilots are represented by the Association, ExpressJet and the acquired air carrier agree to the provisions for filling of vacancies and displacement rights
negotiated and agreed to by ExpressJet, the acquired air carrier and ALPA; provided that if an agreement is not executed within 30 days from the date of acquisition of the acquired carrier, ExpressJet, the acquired air carrier and ALPA shall jointly submit outstanding issues on the filling of vacancies and displacements rights to expedited binding arbitration;

g. No ExpressJet aircraft (including orders and options) shall be transferred to the acquired air carrier; provided however, if Continental reduces the number of aircraft flying pursuant to the
Continental Capacity Purchase Agreement, that number of aircraft may be transferred to the acquired air carrier; and,

h. Pending the implementation of the provisions for filling of vacancies and displacement rights between the air carriers and the integrated pilot seniority list in paragraphs 3.b.,c.,e. and f., above, no pilot on the ExpressJet pilot seniority list shall be reduced in status or pay category, nor shall vacancies be filled at the acquired air carrier that are the result of a new Code Share Agreement or transferred aircraft permitted in paragraph 3.a. or g., above.

4. If Holdings acquires an air carrier that does not have a Code Share Agreement and only operates aircraft lawfully operable in commercial passenger flight operations with maximum seating capacity in excess of 70 seats, Holdings will merge such air carrier with ExpressJet pursuant to Section 1.D.3. of the Agreement. However, the merged agreement
referred to in Section 1.D.3.b. of the Agreement may, at the Company’s option, provide for separate operating divisions with rates of pay, rules and working conditions for each of the pre-acquisition operations. The rates of pay, rules and working conditions at each division will be those in place at the time of the acquisition. Further, pursuant to this option, the merged contract will contain provisions for filling of vacancies and displacement rights between the divisions. The provisions for filling of vacancies and displacement rights between the divisions and the duration section of the merged agreement will be determined through mutual agreement between the Company and the Association. If an agreement is not executed within 30 days from the date of acquisition of the acquired air carrier, the Association and ExpressJet shall jointly submit outstanding issues to expedited binding arbitration as provided in Section 1.D.3.b.

5. If Holdings acquires an air carrier that does not have a Code Share Agreement and operates aircraft lawfully operable in commercial passenger flight operations with maximum seating capacity of 70 seat or less, such air carrier will be merged with ExpressJet pursuant to Section 1.D.3.a. through d. of the Agreement.

6. The flying set forth in Section 1 of the Agreement and in this letter comprise any and all flying that may be performed by Holdings or for any
affiliate of Holdings utilizing aircraft with greater than 19 passenger seats and with pilots who are covered by the RLA.

7. This letter shall be binding upon any successor or assign of Holdings. For purposes of this paragraph, a successor or assign shall be defined as an entity which acquires all or substantially all of the assets or equity of Holdings through a single transaction or multi-step related transactions which close within a 12 month period.

8. No contract or other legally binding commitment involving the transfer of ownership or control pursuant to a successorship transaction, whether by sale, transfer or lease of Holdings or substantially all of its assets, will be signed or otherwise entered into by Holdings unless it is agreed as a material and irrevocable condition of entering into, concluding and implementing such transaction that the obligations contained in this letter will be assumed by the successor. Holdings shall give notice of the existence of this letter to any purchaser, transferee, lessee, or assignee.
Such notice shall be in writing with a copy to the Association, at the time the seller, transferor, or lessor executes a definitive agreement with
respect to a transaction as herein described.

9. In the event of a dispute over the interpretation of this letter, such dispute will be resolved by final and binding arbitration under the expedited dispute resolution provisions of Section 1. of the Agreement. The parties specifically recognize and agree, however, that Holdings is not, and nothing in this letter (including this paragraph) means or can be construed as meaning that Holdings is or has agreed that it is subject to the RLA.

10. This letter shall be effective upon execution and shall run concurrently with the Agreement including any status quo period under the RLA.

 

[Speedtape]

I know there was an ealier caution on absolute statements but Jerry will NEVER combine these groups. He can get his cost savings combining other parts of the company but it is much better and gives him more control over the pilots to keep them separate. There is nothing to be gained by current skywest pilots from buying another regional and keeping it separate. Perhaps skywest pilots will get a few extra rj's but overall its whipsaw. Did anybodies schedule/pay get better at skywest after they bought asa? Btw, guess what money they keep using to buy these other companies. You help raise it and they drain it to fund what will only benefit corporate.

Well said Sedona! Presently, both of our wholly owned companies are generating the cash at about $200 million, combined, a year, to make these acquisitions. Soon, we will be joined by a 3rd company. But, at least we have jobs! Many pilots will be furloughed at other major carriers, shortly after Summer.

 

[suupah]

looks like they are putting the xjt mec in a corner. Too bad here. xjt, imho is one of the best regional products out there with skywest being equally good...again imho. good luck to all involved. sometimes i HATE this job.

 

[Ben Dover]

After reading the stuff on EDGAR here's my take:

THIS IS A DONE DEAL!

Only thing left to do is haggle over price.

 

[EMB170Pilot]

so now ASA and XJT are Skywest's bitches?

 

[TEXAN AVIATOR]

Just cracked a beer.......SkyWest's non ALPA group will slowly take over all our flying and kill xjt. Great!:bomb:

 

[Erlanger]

so now ASA and XJT are Skywest's bitches?

There's twins now in the family. Twin red headed step children.

 

[Erlanger]

Just cracked a beer.......SkyWest's non ALPA group will slowly take over all our flying and kill xjt. Great!:bomb:

Francis, you need to relax. The ASA pilots thought the same thing. Ain't going to happen. XJT will be run separately like ASA is. Read the posts by USCtrojan and Speedtape. It'll all be fine.

 

[MYFpilot]

Secondly, we need the agreement of ALPA that the certain undated letter among ExpressJet, XJT Holdings, Inc., ALPA and the ExpressJet MEC, appended as pages 223 through 226 of the CBA, shall be revoked and deemed null and void, prior to the conclusion of the acquisition.

What does SkyWest not like about pages 223 thru 226?