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UAL Close To New Financing Package

Tue Jul 20, 2004 6:11 pm

According to the WSJ this morning UAL is close to renegotiating terms of a financing package to double the cash available and extend the maturity to next summer. "The new $1 billion facility, which could be finalized as early as Thursday, wouldn't come due until June 30, 2005, said people familiar with the negotiations. The current, smaller financing package matures at the end of this year. The new facility would be backed by the same strong collateral package -- jetliners, spare engines, landing slots at airports in Washington and New York, UAL's Pacific route rights and its access to London's Heathrow Airport -- that secures the current financing."
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RE: UAL Close To New Financing Package

Tue Jul 20, 2004 11:02 pm

Good to hear....looks like the end of ch 11 is coming closer.
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RE: UAL Close To New Financing Package

Wed Jul 21, 2004 1:08 am

Any news about what cuts in wages may be involved? After the loan guarantees were denied by the Stabilization Board there was talk UA employees may lose their pensions. Is that still a possibility?

Charles, SJ
The customer isn't a moron, she is your wife -David Ogilvy
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RE: UAL Close To New Financing Package

Wed Jul 21, 2004 1:15 am

Isn't the most basic advice of a credit counselor/financial advisor to a debt-laden client something along the lines of "paying a credit card with another credit card is bad..."? Can we start expecting an annual UAL bailout package?
Southside Irish...our two teams are the White Sox and whoever plays the Cubs!
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RE: UAL Close To New Financing Package

Wed Jul 21, 2004 3:06 am

Great news for all the pax and employees - as well as the economies of Chicago, Denver, Washington D.C., LA, and San Francisco.
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RE: UAL Close To New Financing Package

Wed Jul 21, 2004 5:14 am

I think you missed the point, this is DIP financing, or in other words while in bankruptcy financing, not emerging from bankruptcy financing.

This may be a sign that United intends to remain in bankruptcy longer than reported.

Also, this is not a new financing package. It is a renegotiation of the current DIP financing package in order to extend coverage to next summer and enlarge the original 1.5B loan by an additional 1B.
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RE: UAL Close To New Financing Package

Wed Jul 21, 2004 12:21 pm

That is not good news for the employees, that means more debt and chances are LONGER in BK.

They are mortgaging almost everything..that in its self is scary.
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RE: UAL Close To New Financing Package

Wed Jul 21, 2004 3:21 pm


In my opinion, this is very important and good news for the employees at UAL. When we completed the ATSB process without getting a positive response, a new financing strategy needed to be implemented. This involves negotiations with the equity and traditional lending markets. These deals can take quite a bit of time. It was essential that we have the funding in place to operate smoothly while this process plays itself out. If we end up not needing it, great. But it would have been foolish not to plan for it. I also tend to agree with Tilton, who said that we should take advantage of the protections of Ch 11 as long as we need to in order to make sure we do this right the first time.


No mention thus far about what, if any, further concessions are going to be required of the employees. Anything you hear at this point is TOTAL speculation. How do I know this? Because the negotiations have just started. Much of what occurs depends on how much financing is available from traditional lenders, and how much is required from equity investors. Then you have to see exactly what kind of equity investors you end up doing business with. I am not on the negotiating committee, so I will abstain from comment about what I think will happen. I'm sure you will see some changes to the contracts that we have in place, but to what extent, NOBODY on this planet knows yet.


Obviously we would prefer not to be putting up further collateral and borrowing more money. The ATSB decided that our problems were not generated by September 11th (obviously they missed the fact that two of those planes were ours... flew them both) and that we are not an essential part of the U.S. transportation system. However, Frontier, America West, Aloha and others must be, as they were backed by the ATSB... but I digress. I'm not sure what kind of bailout you are suggesting we got, or are trying to get, but this is certainly not the road we wanted to be on. But here we are. Just trying to do the best we can. If you want to see leveraged, look at Continental...
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RE: UAL Close To New Financing Package

Wed Jul 21, 2004 3:31 pm

Mm320cap - very well said - you have probably answered a lot of questions for a lot of people.

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RE: UAL Close To New Financing Package

Thu Jul 22, 2004 12:31 am

Ok, I am a little confused, does this mean that UAL will remain in CH11 until 2005 sometime? I thought their final deadline as issued by the court was late summer, and it could not be extended.....Can anyone clear this up?
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