AMR Withdraws Convertible Debt Offering
Monday August 4, 7:09 pm ET
FORT WORTH, Texas, Aug. 4 /PRNewswire/ -- AMR Corp. (NYSE: AMR - News) announced that due to the state of current market conditions, it has decided not to sell a convertible debt offering launched earlier today.
With the significant improvement we have seen in AMR''s operating results beginning in May, and with our strong cash balance of more than $2.7 billion, we felt it made no sense to proceed with this transaction in market conditions as they evolved today, and which are at odds with the growing improvement of our company, said AMR''s Senior Vice President and Chief Financial Officer Jeffrey Campbell.
AMR last Friday (Aug. 1) reported a record high July load factor of 81 percent resulting from strong gains in both domestic and international markets. Additionally, the company estimated that unit revenues improved an estimated nine to 11 percent from their levels of the same period a year ago.
Statements in this news release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company''s expectations or beliefs concerning future events. When used in this news release, the words expects, plans, anticipates, believes, and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, without limitation, the Company''s expectations concerning operations and financial conditions, including changes in capacity, revenues, and costs, expectations as to future financing needs, overall economic conditions and plans and objectives for future operations, the impact on the Company of the events of Sept. 11, 2001, and its results of operations for the past two years and the sufficiency of its financial resources to absorb that impact. Other forward-looking statements include statements which do not relate solely to historical facts, such as, without limitation, statements which discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward- looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements are subject to a number of risk factors that could cause actual results to differ materially from our expectations. The following factors, in addition to other possible factors not listed, could cause the Company''s actual results to differ materially from those expressed in forward-looking statements: the uncertain financial and business environment the Company faces, the struggling economy, high fuel prices and the availability of fuel, the residual effects of the war in Iraq, conflicts in the Middle East, the residual effects of the SARS outbreak, historically low fare levels, the competitive environment, uncertainties with respect to the Company''s international operations, changes in its business strategy, actions by U.S. or foreign government agencies, the possible occurrence of additional terrorist attacks, the inability of the Company to satisfy existing liquidity requirements or other covenants in certain of its credit agreements and the availability of future financing. Additional information concerning these and other factors is contained in the Company''s Securities and Exchange Commission filings, including but not limited to the Form 10-K for the year ended Dec. 31, 2002, and the Form 10-Q for the quarter ended June 31, 2003.
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On 8/4/2003 9:32:26 PM FA Mikey wrote:
The only good news is that the company has enough money on hand to more than get through the leaner months ahead. Hopefully we will at worst be cash positive at best righting this giant mess.
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How much did we spend getting this deal set up, only to withdraw it? Do you think it was substantial?
The only good news is that the company has enough money on hand to more than get through the leaner months ahead. Hopefully we will at worst be cash positive at best righting this giant mess.
I agree, Mikey. It sounds like AMR was basically testing the waters with the convertible offering, and finding no one who would bite on it (at least not at an acceptable interest rate), they called off the dogs. I guess it never hurts to know where you stand in the capital markets - clearly, more conservative investors (i.e. bondholders and other fixed income investors) are not ready to take a chance on AMR just yet.
Market conditions were indeed tough for AMR's planned debt sale. At midday Monday, Standard & Poor's rated the proposed sale with a CCC rating, which is two rungs below American's corporate credit rating of B negative. The S&P said the offering places unsecured creditors, such as equity holders, "in an effectively subordinated position."
