Ual Will Stand....

[FutureTEDpilot]

[FONT=Arial,Helvetica,Geneva][SIZE=-1]United Announces $3 Billion All-Debt Exit Financing
JPMorgan and Citigroup to Be Joint Lead Arrangers United on Track to Exit Chapter 11 in Early 2006

CHICAGO, Oct 06, 2005 /PRNewswire-FirstCall via COMTEX/ -- UAL Corporation [UALAQ] , the holding company whose primary subsidiary is United Airlines, today announced that JPMorgan and Citigroup will be joint lead arrangers for a $3 billion all-debt exit financing package with very competitive terms. This marks a significant step forward to United's anticipated exit from bankruptcy in February 2006.

"United's restructuring positions the company to compete successfully with the strongest airlines and to confront ongoing industry volatility," said Glenn Tilton, United's chairman, CEO and president. "With the past three years as a proving ground and with these global institutions as our partners, we now look forward to moving beyond our restructuring and focusing all of United's energy and resources on our customers, our investors and our employees."

The commitment letter signed by United earlier today is for $3 billion of debt financing with a term of six years. The loan's interest rate is LIBOR (London Interbank Offered Rate) plus 450 basis points and has minimal amortization. JPMorgan and Citigroup will syndicate the loan to a consortium of financial institutions.

"We have supported United throughout the many complexities of its rigorous and thorough restructuring," said James B. Lee, vice chairman of JPMorgan Chase. "United has highly attractive assets and a tested, successful management team. The company has proven its ability to navigate through difficult and volatile circumstances while continuing to improve its operations and financial performance."

"United has made significant progress and has dramatically improved every aspect of its business," said Chad Leat, head of global credit markets for Citigroup corporate and investment banking. "We are extremely pleased to be joint lead for the company's financing and look forward to continuing to work with them."

United previously announced that the company received proposals from four leading financial institutions for all-debt exit financing. Exit financing will be used by United to repay the Debtor-In-Possession (DIP) facility, to make other payments required upon exit from bankruptcy, and to ensure strong cash balances to conduct post-reorganization operations.

"We are very pleased to have arranged financing on attractive terms from two outstanding global financial institutions," said Jake Brace, executive vice president and chief financial officer. "United is a far different company coming out of bankruptcy than it was going in. Our demonstrated ability to restructure resulted in four major banks competing vigorously to provide exit financing, and today's agreement reflects the market's confidence in United. We also thank the Creditors' Committee for their active participation and support in the evaluation and selection process."

United's commitment letter will be submitted to the U.S. Bankruptcy Court for approval on Oct. 7 for consideration at the Oct. 21 Omnibus Hearing. Additional terms will also be included in the amended Plan of Reorganization expected to be filed with the Court in the future.
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[WatchYourElbows]

.....silence......chirp, chirp..............................................................are they crying that they didn't get our planes and routes? HA!

 

[Chuck Yogourt]

Someone is going to invest 3 billion into this terd? I think I need a beer.

 

[AA717driver]

Congrats. You're now proud of a job that pays what TWA paid in 1999. I, too, remember when I uttered the words "hey, we're gonna make it". That was when we got rid of Icahn in '92.

Enjoy the ride.TC

 

[FutureTEDpilot]

U.S. BUSINESS NEWS

UAL Gets $3 Billion Financing Deal
J.P. Morgan and Citigroup
Agree to All-Debt Package;
A Path Out of Bankruptcy
By SUSAN CAREY
Staff Reporter of THE WALL STREET JOURNAL
October 7, 2005

United Airlines parent UAL Corp. said it received commitments for a $3 billion all-debt financing package from J.P. Morgan Chase & Co., and Citigroup Inc., marking a big step on the road to exiting from bankruptcy-court protection.

With that money, the company will be able to repay an interim bankruptcy loan and emerge from court protection Feb. 1. Glenn Tilton, UAL's chief executive, said the financing is "an affirmation of everything we have done" during the three-year restructuring to become more lean, efficient and customer-pleasing. "It's a good day for our employees," Mr. Tilton said in an interview. "They are pumped up."

The company had been shopping for $2.5 billion to fund its exit, but competition between four financial institutions resulted in the larger loan package on "very competitive" terms, the company said. The six-year loan's interest rate is LIBOR (London Interbank Offered Rate) plus 450 basis points, or about 8.5%. Joint lead arrangers J.P. Morgan and Citigroup will syndicate the secured loan to a consortium of financial institutions. General Electric Co. and Deutsche Bank AG also competed for the business, the airline said.

Over the summer, United studied the possibility of augmenting the debt financing with a rights offering or minority private-equity investment. But those money-raising ideas appear off the table for now. "Equity capital has the effect of diluting the recoveries for both our creditors and employees, who typically end up owning equity in the reorganized company," Jake Brace, UAL's chief financial officer, said in a message to employees yesterday. "An all-debt financing package is simply a better deal for them."

UAL filed for Chapter 11 in December 2002. If it emerges in early February, it will have spent 38 months in court protection. US Airways Group Inc. went through two Chapter 11 filings in the past three years and last month exited and merged with America West Holdings Corp. Delta Air Lines and Northwest Airlines both filed for Chapter 11 on Sept. 14. The industry is being roiled by record jet-fuel prices, weak pricing power and stiff competition from discount airlines that have lower costs.

During its stay in court, United has lopped $7 billion from its annual expenses, jettisoned its defined-benefit pension plans, shifted more of its flights to profitable overseas routes, formed a low-fare domestic division called Ted and improved its punctuality. Despite high fuel prices, UAL expects to be profitable for each of the next five years, according to financial projections in its disclosure statement filed last month with U.S. Bankruptcy Court in Chicago.

James B. Lee Jr., vice chairman of J.P. Morgan Chase and a longtime banker to United, said when the airline steps out of court protection, it "will have very attractive leverage levels." Asked about the increased loan amount, Mr. Lee said, "whenever you're structuring a facility like this for a really big company going through a transition, it's always better to err on the side of more." Securing the facility will be "more than enough collateral," he said. As for the interest rate, "this is a very competitive rate in this industry, Mr. Lee said, noting that some recent airline financings have carried much higher rates.

United, the nation's second-largest airline by traffic, currently owes $1.3 billion on a syndicated debtor-in-possession loan co-led by J.P. Morgan and Citigroup. That facility's interest rate is LIBOR plus 425 basis points. After repaying that obligation and making other payments required to leave Chapter 11, UAL expects to have more than $3 billion in unrestricted cash. "We'll have more cash at exit than we've had in a very long time," said Mr. Brace, the CFO.

Chicago-based United said it will submit the exit-financing agreement to the bankruptcy court today. A hearing on UAL's plan of reorganization and disclosure statement is scheduled for Oct. 20. If those documents are approved by Judge Eugene Wedoff, UAL can begin the process of soliciting creditors' votes on the plan. The proposed reorganization would repay all secured creditors in full, along with holders of priority tax claims and administrative claims. Unsecured creditors would receive 4% to 7% of their claims in new UAL common stock; holders of the existing common and preferred shares would receive no compensation when those shares are canceled.

 

[Metro752]

Ual Will Stand....in Quicksand!

 

[FlyBoeingJets]

I think UAL will succeed. It's hard to argue with the big money being thrown at them. But these earnings estimates look worrisome. The CEO says they will be profitable. Maybe these estimates are out of date.


Earnings Est
[SIZE=-2]Current Qtr [/SIZE]
[SIZE=-2]
Sep-05
[/SIZE]Avg. Estimate -1.10
No. of Analysts 3
Low Estimate -2.67
High Estimate -0.09
Year Ago EPS -1.55

[SIZE=-2]Next Qtr
Dec-05
[/SIZE]Avg. Estimate -3.25
No. of Analysts 3
Low Estimate -4.02
High Estimate -2.00
Year Ago EPS -4.77

[SIZE=-2]Current Year
Dec-05
[/SIZE]Avg. Estimate -7.25
No. of Analysts 3
Low Estimate -9.41
High Estimate -5.40

[SIZE=-2]Next Year
Dec-06
[/SIZE]Avg. Estimate -3.51
No. of Analysts 2
Low Estimate -4.00
High Estimate -3.01
Year Ago EPS -7.25
Year Ago EPS -10.16

 

[Mugs]

Someone is going to invest 3 billion into this terd? I think I need a beer.

Another couple of cases of Milwaukee's Best about to be sold at a 7-11 in Wisconsin. Quantity has a quality all of it's own.

 

[AA717driver]

Another couple of cases of Milwaukee's Best about to be sold at a 7-11 in Wisconsin. Quantity has a quality all of it's own.

Mugs--I thought you had more class than that. At least make it MGD Light. A 30-pack for $14 and change. Mmmmm... Better pick up some pork rinds, too.

A few hours later... uke: TC

 

[WatchYourElbows]

From US Business News

Over the summer, United studied the possibility of augmenting the debt financing with a rights offering or minority private-equity investment. But those money-raising ideas appear off the table for now. "Equity capital has the effect of diluting the recoveries for both our creditors and employees, who typically end up owning equity in the reorganized company," Jake Brace, UAL's chief financial officer, said in a message to employees yesterday. "An all-debt financing package is simply a better deal for them."

James B. Lee Jr., vice chairman of J.P. Morgan Chase and a longtime banker to United, said when the airline steps out of court protection, it "will have very attractive leverage levels." Asked about the increased loan amount, Mr. Lee said, "whenever you're structuring a facility like this for a really big company going through a transition, it's always better to err on the side of more." Securing the facility will be "more than enough collateral," he said. As for the interest rate, "this is a very competitive rate in this industry, Mr. Lee said, noting that some recent airline financings have carried much higher rates.

United, the nation's second-largest airline by traffic, currently owes $1.3 billion on a syndicated debtor-in-possession loan co-led by J.P. Morgan and Citigroup. That facility's interest rate is LIBOR plus 425 basis points. After repaying that obligation and making other payments required to leave Chapter 11, UAL expects to have more than $3 billion in unrestricted cash. "We'll have more cash at exit than we've had in a very long time," said Mr. Brace, the CFO.
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