Atsb Wants To Shed Us/hp Guaranteed

[BoeingBoy]

WASHINGTON, Sept 23 (Reuters) - The U.S. government wants to significantly lower its financial exposure to commercial airlines by selling $1 billion in federally backed loans for US Airways (UAIRQ.OB: Quote, Profile, Research) and America West Airlines (AWA.N: Quote, Profile, Research) , the Treasury Department said on Friday.

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Jim

 

[EricLv2Fish]

I don't remember exactly how many shares Uncle Sam bought of AWA stock (as part of the loan guarentee) and at what price (I think it was around 1.10 a share), but if the government sold them today they would make a killing. AWA stock was up around 8.50 a share on Friday.

 

[BoeingBoy]

Apparently, the ATSB received warrents convertible to stock just as they received in return for the loan to the "old" US. As part of the POR, they received "new" warrants for "new" US stock in exchange for the "old" HP warrents (the "old" US warrants apparently disappear). The "new" warrants can be converted to "new" stock by paying $7.27 per share plus surrendering the warrant.

In short, the ATSB cannot trade their "old" HP warrants in for current HP stock.

On the other hand, if the investors in "new" US are so excited about the prospects for the future, they should be falling all over themselves to get their hands on these "new" warrants - the conversion price is less than half what the investors are paying per share ($16-$17+).

Jim