Northwest Airlines Corporation today announced the pricing of its offering
of $225 million original principal amount of Convertible Senior Notes due
2023, to qualified institutional buyers pursuant to Rule 144A, and
non-U.S. persons pursuant to Regulation S, under the Securities Act of
1933. The sale of the notes is expected to close on November 4, 2003.
Interest on the notes will be 7.625% per $1,000 original principal amount
and will be payable in cash in arrears semi-annually through November 15,
2008. Thereafter, the principal amount of the notes will accrete
semi-annually at a rate of 7.625% per year to maturity.
Each note will be issued at a price of $1,000 and is convertible into
Northwest Airlines Corporation common stock at a conversion rate of
43.6681 shares per $1,000 original principal amount of notes (equal to an
initial conversion price of approximately $22.90 per share), subject to
adjustment in certain circumstances. Holders of the notes may convert
their notes only if: (i) the price of the Northwest Airlines Corporation`s
common stock reaches a specified threshold; (ii) the trading price for the
notes falls below certain thresholds; (iii) the notes have been called for
redemption; or (iv) specified corporate transactions occur. The initial
conversion price represents a 60 percent premium over the last reported
sale price of the company`s common stock on October 29, 2003, which was
$14.31 per share. The notes will be guaranteed by Northwest Airlines, Inc.
Northwest Airlines Corporation may redeem all or some of the notes for
cash at any time on or after November 15, 2006, at a redemption price
equal to the accreted principal amount plus accrued and unpaid interest,
if any, to the redemption date. Holders may require Northwest Airlines
Corporation to repurchase the notes on November 15 of 2008, 2013 and 2018
at a repurchase price equal to the accreted principal amount plus accrued
and unpaid interest, if any, to the repurchase date. Northwest Airlines
Corporation may elect to pay the repurchase price in cash or in shares of
common stock, or a combination of both, subject to certain conditions.
The company has granted the initial purchaser of the notes a 30-day option
to purchase up to an additional $45 million original principal amount of
the notes.

Northwest Airlines Corporation plans to use the net proceeds from the
offering for working capital and general corporate purposes. Northwest
Airlines Corporation also intends to use approximately $10 million of the
proceeds to enter into call spread options on its common stock to limit
exposure to potential dilution from conversion of the notes, such that the
effective conversion premium is in excess of 100% over the last reported
sale price of the company`s common stock on October 29, 2003. In
connection with the call spread options, the initial purchasers are
expected to take positions in Northwest Airlines Corporation`s common
stock in secondary market transactions and/or enter into various
derivative transactions.
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