US Airways Restructuring Remains On Track

27th Sep 2002

US Airways’ restructuring plan to emerge from Chapter 11 protection by early 2003 remains on track, following decisions issued today by the U.S. Bankruptcy Court to allow the Retirement Systems of Alabama (RSA) to serve as the airline’s new equity plan sponsor and provide the $500 million financing for the Company’s debtor-in-possession (DIP) funds.
Judge Stephen S. Mitchell also approved the terms for a bidding process in order to allow US Airways to consider higher or otherwise better equity investment offers as part of the airline’s restructuring, pursuant to the competitive bidding process also approved by the Bankruptcy Court today.
“The RSA offer represents a premium over the original equity investment offer from Texas Pacific Group, and we are confident of RSA’s commitment to our restructuring efforts,” said David Siegel, US Airways president and chief executive officer. “The court’s affirmation of our plans today will keep our fast-track restructuring on schedule so that we can present a plan of reorganization by the end of the year and emerge from Chapter 11 protection in early 2003.”
Under the terms of the bidding process put in place today, qualified bidders will be able to conduct due diligence at a Company data room and attend management presentations beginning Sept. 27, and continuing through mid-November, allowing the company to finalize its equity sponsor and file its Chapter 11 reorganization plan by year-end.
US Airways announced the RSA agreement this morning, which includes an equity investment, the DIP financing, and an agreement to restructure $340 million of aircraft debt obligations held by RSA. Judge Mitchell granted interim approval of the new DIP financing package, and allowed a $300 million draw on those funds, which includes the payback of $75 million that has already been drawn from the original DIP loan provided by Credit Suisse First Boston, Texas Pacific Group and Bank of America. The RSA-sponsored DIP financing replaces the previous fund instrument. Final approval of the DIP financing is set for the next omnibus court hearing scheduled for Nov. 7, 2002.


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