Governor, County Executives Announce Financing Agreement With Midwest Airlines
Milwaukee, Wisconsin, June 27, 2003 – At a news conference today at General Mitchell International Airport, Governor Jim Doyle and the county executives of Milwaukee and Racine counties announced a financing proposal to support Midwest Airlines’ efforts to financially restructure its operations.
The proposal would permit Milwaukee County to become the guarantor of payments by Midwest Airlines on two industrial development revenue bonds. The bonds were issued by the City of Milwaukee to fund construction of two aircraft hangars on county-owned property: one for Midwest Airlines ($7.9 million in 1998), the other for Midwest Connect ($6.3 million in 2001). The bond payments are currently guaranteed by two letters of credit totaling $14.4 million issued by the company’s credit facility banks. The agreement with the credit facility banks is scheduled to expire on August 30, 2003; Midwest is seeking replacement financing. The arrangement with Milwaukee County will not become effective until the new financing is in place.
At the request of Governor Doyle, the Wisconsin Department of Commerce will provide a $4 million Economic Community Development Block Grant to Racine County. The grant is targeted to support job creation and retention for Racine County by ensuring the long-term viability of the air transportation system based at nearby General Mitchell International Airport and its locally based airline, which employs more than 300 Racine County residents. Racine County will retain $12,000, with the balance going to Milwaukee County to be added to $1 million provided by Midwest Airlines. The money will be placed in escrow for use in the event Midwest would fail to make required interest or principal payments.
“This agreement is an excellent example of intergovernmental cooperation,” said Governor Doyle. “The state, working with both counties, will help ensure a strong transportation infrastructure for southeastern Wisconsin.”
The agreement is designed to impose no risk for taxpayers because there will be more than sufficient collateral to guarantee interest and principal payments on the $14.2 million debt: $5 million in cash in escrow plus hangars valued at $12.75 million, for a total of $17.75 million.
“The challenges the airline industry is facing are unprecedented, and we are truly gratified by the backing of the state, and Milwaukee and Racine counties – another example of the loyalty that the citizens of this state have extended to us over the past 19 years,” said Timothy E. Hoeksema, chairman and chief executive officer of Midwest Airlines. He pointed out that the financing proposal is a critical component of the airline’s restructuring efforts, whether those efforts are completed with or without the help of the court in Chapter 11.
The Milwaukee and Racine county boards must still approve the proposal. In Milwaukee, a committee vote is scheduled for July 17, with the full board vote on July 24.
Midwest Airlines features nonstop jet service to major destinations throughout the United States. Skyway Airlines, Inc. – its wholly owned subsidiary – operates Midwest Connect, which offers connections to Midwest Airlines as well as point-to-point service between select markets on regional jet and turboprop aircraft. Together, the airlines offer service to 51 cities. More information is available at www.midwestairlines.com.
This document contains forward-looking statements that may state the company’s or management’s intentions, hopes, beliefs, expectations or predictions for the future. Words such as “expect,” “anticipate,” “believe,” “estimate,” “goal,” “objective” or similar words are intended to identify forward-looking statements. It is important to note that the company’s actual results could differ materially from those projected results due to factors that include but are not limited to uncertainties related to general economic factors, industry conditions, scheduling developments, government regulations, labor relations, aircraft maintenance and refurbishment schedules, potential delays related to acquired aircraft, fuel costs, competitive developments, interest rates, the meeting of certain financial covenants, terrorist attacks or fear of terrorist attacks, and war or the threat of war.