• This site moved from forums.flightinfo.com to flightinfo.com. Please update your bookmarks.

Ual Will Stand....

FutureTEDpilot

Well-known member
Joined
Mar 7, 2004
Posts
174
Total Time
9500+
[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.
[/SIZE][/FONT]
 

WatchYourElbows

Well-known member
Joined
Oct 2, 2003
Posts
79
Total Time
a LOT
.....silence......chirp, chirp..............................................................are they crying that they didn't get our planes and routes? HA!
 
Last edited:
C

Chuck Yogourt

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

AA717driver

A simpler time...
Joined
Mar 27, 2003
Posts
4,911
Total Time
+/-13k
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

Well-known member
Joined
Mar 7, 2004
Posts
174
Total Time
9500+
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.
 

FlyBoeingJets

YES, that's NICE
Joined
Mar 20, 2003
Posts
1,802
Total Time
>5000
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
 
Last edited:

Mugs

Well-known member
Joined
May 14, 2003
Posts
500
Total Time
8,800
Chuck Yogourt said:
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

A simpler time...
Joined
Mar 27, 2003
Posts
4,911
Total Time
+/-13k
Mugs said:
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... :puke: TC
 

WatchYourElbows

Well-known member
Joined
Oct 2, 2003
Posts
79
Total Time
a LOT
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.
---------
 

TWA Dude

Well-known member
Joined
Nov 26, 2001
Posts
3,666
Total Time
9999+
AA717driver said:
Mmmmm... Better pick up some pork rinds, too.
... and cheese curds -- the hard, squeaky kind, and a CD of Da Yoopers.
 

HowlinMadMurdoc

Did I crash again???
Joined
Nov 13, 2004
Posts
205
Total Time
3000+
TWA Dude said:
... and cheese curds -- the hard, squeaky kind, and a CD of Da Yoopers.
And a round of visits to the nearest cardiologist...

Ya know what I mean, hey der...

HMM
 

G4G5

Well-known member
Joined
Sep 20, 2002
Posts
1,800
Total Time
8500+
FlyBoeingJets said:
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
It's not a matter of spending $3 billion. Banks are not in the business of guranteeing the survival of bankrupt airlines. They have obviously determined that the sum of the pieces is worth more then the sum of the whole. Or they have established payment terms that are quite lucrative to gurantee a very nice return on their investment.

If they actually believed in the reorginization plan then they would have taken on an equity stake. This is nothing more then a loan (from a loan shark)

The airline calls the rate favorable (what else would they say). I will let you be the judge. It's a variable rate loan (which way are interest rates going)
"The six-year loan's interest rate is calculated as the London interbank offered rate, or Libor, plus 4.5 percentage points, or about 8.5%"

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 Chase and Citigroup. That facility's interest rate is Libor plus 4.25 percentage 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 finance chief.

Let's see when UAL was going CH11 Chase was willing to offer DIP of LIBOR+ 4.25%
Now that things are much better Chase offers to INCREASE the rate to LIBOR+ 4.5%

things that make you go hummmmmmmmmmmm.
 
Last edited:

WatchYourElbows

Well-known member
Joined
Oct 2, 2003
Posts
79
Total Time
a LOT
Why would they want a piece of it? Does your bank own a piece of your house? (only if you default on payments). United saw how well it worked with Bronner at US Airways and decided to go to the REAL source of money, the banks!

People don't go ask their neighbors to help them out financially, they go to the banks too. Who are you kidding?
 

G4G5

Well-known member
Joined
Sep 20, 2002
Posts
1,800
Total Time
8500+
Who are you kidding?
Let's see how well did Bonderman do with CAL stock? Their is a reason why Texas Pacific Group is in the position they are in.

Bronner could carry Bondermans bags to one of his Falcon 900's.

If UAL was such a good deal firms like KKR or Texas Pacific Group would have been lining up for an equity stake, like they did with CAL.
 
Last edited:
Top