PRESS RELEASE: UAL Corporation Reaches Agreement to Amend DIP Financing Credit
Facilities
Dow Jones News Service via Dow Jones
Amendments Provide Liquidity Necessary to Complete Restructuring
Maturity Date Extended Through June 2005
Terms Reflect DIP Lenders' Confidence in UAL Financial Performance
CHICAGO, July 23 /PRNewswire-FirstCall/ -- UAL Corporation (OTC Bulletin
Board: UALAQ), the holding company whose primary subsidiary is United Airlines,
today reported it has successfully negotiated an agreement to amend its
debtor-in-possession (DIP) financing credit facilities with its current lenders,
including JPMorganChase, Citigroup, and CIT, and a new lender, GE Capital.
The facilities will provide UAL with an additional $500 million in available
funds, delivering the liquidity necessary to complete UAL's successful
restructuring. The maturity date is June 30, 2005, giving the company
additional flexibility as it moves to assemble an exit financing package. The
agreement maintains the favorable interest rates and types of covenants
established in the amended DIP agreement of May 2004.
The company will seek bankruptcy court approval of the amended DIP agreement
at the omnibus hearing currently scheduled for August 20, 2004.
"Without the Air Transportation Stabilization Board (ATSB) loan guarantee, we
need to do more restructuring and cost reduction work to formulate a business
plan that will attract the financing necessary to exit Chapter 11. The amended
DIP gives us the time and money to do this essential work in a systematic and
measured way," said Jake Brace, United's executive vice
president and chief financial officer. "The willingness of lenders to
participate in the amended DIP following the denial of the federal loan
guarantee reflects their confidence in our financial performance and ability to
become more competitive by further improving our cost structure."
The amended DIP agreement contains financial covenants that do not permit the
company to make any payments inconsistent with its current financial
projections, effectively prohibiting further pension contributions before exit,
unless the lenders otherwise consent based on a modified business plan. As a
result, the company does not expect to make any pension contributions before
exit because such payments would diminish the company's liquidity and reduce
flexibility, thus impairing the company's ability to attract exit financing. In
and of itself, this decision does not affect the benefits currently being paid
under these plans.
By amending the DIP and not making these pension contributions, the company
believes it will have adequate funding until its exit from bankruptcy. These
actions will enhance UAL's flexibility while it continues to restructure in a
challenging and uncertain marketplace.
In the absence of a federal loan guarantee, United's long-term business plan
must have cash flow and liquidity levels that the capital markets are willing to
finance. Because existing pension plan contributions will remain a huge
financial burden after exit, it is incumbent on United to study all possible
options and to determine whether United can sustain this burden and still
attract exit financing. At present, no decisions have been made and much work
and analysis needs to be completed. United is beginning to discuss this
situation with its unions and other stakeholders.
News releases and other information about United Airlines can be found at the
company's website, http://www.united.com .
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Certain statements included in this press release are forward-looking and
thus reflect the Company's current expectations and beliefs with respect to
certain current and future events and financial performance. Such forward-
looking statements are and will be, as the case may be, subject to many risks
and uncertainties relating to the operations and business environments of the
Company that may cause actual results to differ materially from any future
results expressed or implied in such forward-looking statements. Factors that
could significantly affect net earnings, revenues, expenses, costs, load factor
and capacity include, without limitation, the following: the Company's ability
to continue as a going concern; the Company's ability to operate pursuant to the
terms of the DIP financing; the Company's ability to obtain court approval with
respect to motions in the Chapter 11 proceeding prosecuted by it from time to
time; the Company's ability to develop, prosecute, confirm and consummate one or
more plans of reorganization with respect to the Chapter 11 cases; risks
associated with third parties seeking and obtaining court approval to terminate
or shorten the exclusive period for the Company to propose and confirm one or
more plans of reorganization; the potential adverse impact of the Chapter 11
cases on the Company's liquidity or results of operations; the appointment of a
Chapter 11 trustee or conversion of the cases to Chapter 7; the costs and
availability of financing; the Company's ability to execute its business plan;
the Company's ability to attract, motivate and/or retain key employees; the
Company's ability to attract and retain customers; demand for transportation in
the markets in which the Company operates; general economic conditions; the
effects of any hostilities or act of war or any terrorist attack; the ability
of other air carriers with whom the Company has alliances or partnerships to
provide the services contemplated by the respective arrangements with such
carriers; the costs and availability of aircraft insurance; the costs of
aviation fuel; the costs associated with security measures and practices;
competitive pressures on pricing (particularly from lower-cost competitors);
government legislation and regulation; and other risks and uncertainties set
forth from time to time in UAL's reports to the United States Securities and
Exchange Commission. Consequently, the forward-looking statements should not be
regarded as representations or warranties by the Company that such matters will
be realized. The Company disclaims any intent or obligation to update or revise
any of the forward-looking statements, whether in response to new information,
unforeseen events, changed circumstances or otherwise.
CONTACT: Worldwide Communications:
Media Relations Office: 847.700.5538
Evenings/Weekends: 847.700.4088
SOURCE UAL Corporation
/CONTACT: Worldwide Communications of UAL Corporation, Media Relations
Office, +1-847-700-5538, or Evenings-Weekends, +1-847-700-4088/
/Web site: http://www.united.com/
Facilities
Dow Jones News Service via Dow Jones
Amendments Provide Liquidity Necessary to Complete Restructuring
Maturity Date Extended Through June 2005
Terms Reflect DIP Lenders' Confidence in UAL Financial Performance
CHICAGO, July 23 /PRNewswire-FirstCall/ -- UAL Corporation (OTC Bulletin
Board: UALAQ), the holding company whose primary subsidiary is United Airlines,
today reported it has successfully negotiated an agreement to amend its
debtor-in-possession (DIP) financing credit facilities with its current lenders,
including JPMorganChase, Citigroup, and CIT, and a new lender, GE Capital.
The facilities will provide UAL with an additional $500 million in available
funds, delivering the liquidity necessary to complete UAL's successful
restructuring. The maturity date is June 30, 2005, giving the company
additional flexibility as it moves to assemble an exit financing package. The
agreement maintains the favorable interest rates and types of covenants
established in the amended DIP agreement of May 2004.
The company will seek bankruptcy court approval of the amended DIP agreement
at the omnibus hearing currently scheduled for August 20, 2004.
"Without the Air Transportation Stabilization Board (ATSB) loan guarantee, we
need to do more restructuring and cost reduction work to formulate a business
plan that will attract the financing necessary to exit Chapter 11. The amended
DIP gives us the time and money to do this essential work in a systematic and
measured way," said Jake Brace, United's executive vice
president and chief financial officer. "The willingness of lenders to
participate in the amended DIP following the denial of the federal loan
guarantee reflects their confidence in our financial performance and ability to
become more competitive by further improving our cost structure."
The amended DIP agreement contains financial covenants that do not permit the
company to make any payments inconsistent with its current financial
projections, effectively prohibiting further pension contributions before exit,
unless the lenders otherwise consent based on a modified business plan. As a
result, the company does not expect to make any pension contributions before
exit because such payments would diminish the company's liquidity and reduce
flexibility, thus impairing the company's ability to attract exit financing. In
and of itself, this decision does not affect the benefits currently being paid
under these plans.
By amending the DIP and not making these pension contributions, the company
believes it will have adequate funding until its exit from bankruptcy. These
actions will enhance UAL's flexibility while it continues to restructure in a
challenging and uncertain marketplace.
In the absence of a federal loan guarantee, United's long-term business plan
must have cash flow and liquidity levels that the capital markets are willing to
finance. Because existing pension plan contributions will remain a huge
financial burden after exit, it is incumbent on United to study all possible
options and to determine whether United can sustain this burden and still
attract exit financing. At present, no decisions have been made and much work
and analysis needs to be completed. United is beginning to discuss this
situation with its unions and other stakeholders.
News releases and other information about United Airlines can be found at the
company's website, http://www.united.com .
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Certain statements included in this press release are forward-looking and
thus reflect the Company's current expectations and beliefs with respect to
certain current and future events and financial performance. Such forward-
looking statements are and will be, as the case may be, subject to many risks
and uncertainties relating to the operations and business environments of the
Company that may cause actual results to differ materially from any future
results expressed or implied in such forward-looking statements. Factors that
could significantly affect net earnings, revenues, expenses, costs, load factor
and capacity include, without limitation, the following: the Company's ability
to continue as a going concern; the Company's ability to operate pursuant to the
terms of the DIP financing; the Company's ability to obtain court approval with
respect to motions in the Chapter 11 proceeding prosecuted by it from time to
time; the Company's ability to develop, prosecute, confirm and consummate one or
more plans of reorganization with respect to the Chapter 11 cases; risks
associated with third parties seeking and obtaining court approval to terminate
or shorten the exclusive period for the Company to propose and confirm one or
more plans of reorganization; the potential adverse impact of the Chapter 11
cases on the Company's liquidity or results of operations; the appointment of a
Chapter 11 trustee or conversion of the cases to Chapter 7; the costs and
availability of financing; the Company's ability to execute its business plan;
the Company's ability to attract, motivate and/or retain key employees; the
Company's ability to attract and retain customers; demand for transportation in
the markets in which the Company operates; general economic conditions; the
effects of any hostilities or act of war or any terrorist attack; the ability
of other air carriers with whom the Company has alliances or partnerships to
provide the services contemplated by the respective arrangements with such
carriers; the costs and availability of aircraft insurance; the costs of
aviation fuel; the costs associated with security measures and practices;
competitive pressures on pricing (particularly from lower-cost competitors);
government legislation and regulation; and other risks and uncertainties set
forth from time to time in UAL's reports to the United States Securities and
Exchange Commission. Consequently, the forward-looking statements should not be
regarded as representations or warranties by the Company that such matters will
be realized. The Company disclaims any intent or obligation to update or revise
any of the forward-looking statements, whether in response to new information,
unforeseen events, changed circumstances or otherwise.
CONTACT: Worldwide Communications:
Media Relations Office: 847.700.5538
Evenings/Weekends: 847.700.4088
SOURCE UAL Corporation
/CONTACT: Worldwide Communications of UAL Corporation, Media Relations
Office, +1-847-700-5538, or Evenings-Weekends, +1-847-700-4088/
/Web site: http://www.united.com/
