Exit Financing - all threads merged

[whatkindoffreshhell]

I trust the ATSB. I do not trust JPMorgan or Citibank.

The ATSB isn't in this game for a commission check.

Is that a joke? Did AMR, CAL, and NWA lobby JP or Citi to deny UAL the loan? Would they even waste time bothering? Do they demand an equity stake just for giving a LOAN? The ATSB is political. every dime UAL gets from a bank without ATSB backing is less equity they have to give to the Feds. I'd prefer they didn't even bother with the kangaroo court.

You're right. Go get the JP & Citi money without the ATSB. Spend it on Ted and pensions.

I laugh at you.

 

[Cosmo]

Other publications are starting to pick up the news about United's imminent agreement with two banks (J. P. Morgan Chase and Citigroup) for exit financing. There was this article in today's edition of the New York Times and this article in today's edition of the Denver Post.

And for those who might question the source of this news, the following quote from the Denver Post article should clear it up:

United officials would not comment, but J.P. Morgan managing director Bill Repko confirmed the deal.

"We think the world of United and what this management team has accomplished," Repko told Bloomberg News.

While United still has some hurdles to overcome prior to exiting Chapter 11, this news is a MAJOR step in the right direction.

 

[Diesel8]

That is good news for the UAL employees.

Like someone else said, I am not sure the banks would be jumping all over themselves, were it not for the ATSB guarantee, I think they are only in, provided they get a guarantee from the ATSB. Much like I doubt RSA would have given a dime to U, were it not for the ATSB

. I do not see a problem getting a stake in UAL, after all, quite a few risk involved and why should the banks reap all the profit. I think it is rich, to feel that there should be no strings attached.

It must however be said, that U was propped up, no reason why UAL should not be.

 

[USA320Pilot]

Cosmo:

Cosmo asked: United is supposedly within a few days of signing an agreement with J. P. Morgan and Citigroup for $2.0 billion in exit financing to emerge from Chapter 11How will this change in United's situation affect the Pittsburgh hub negotiations?"

Chip answers: United's $2.0 billion loan guarantee will be used to pay back up to $1.5 billion in DIP financing, just like at US Airways, and the company will likely need an equity investor, just like Air Canada and US Airways did.

Furthermore, until the pension, UCT airport municipal bond litigation, EETC negotiations, Mesa/ACA/United Dulles problem & antitrust investigations are complete, United will not be able to file its POR by the March deadline.

I doubt the company will have a problem obtaining an extension, but it's no secret US Airways is interested in obtaining some United gates at Chicago and Denver. United is going to have a smaller fleet and operation upon emergence and by the company transferring gates to its business partner both airlines can create economies of scale and either code share or merger passenger travel experience benefits.

As you know, US Airways and United are incrementally integrating operations and co-locating facilities. For example, on October 1 US Airways took custody of two United gates in Seattle and the Arlington-based airline will do the same thing in Los Angeles and San Francisco after the first of the year.

For any deal and continued business partner cost cuts to occur, United must successfully emerge from bankruptcy and the Chicago-based carriers loan guarantee application has been anticipated prior to the POR filing.

US Airways needs leverage to extract the best deal possible and most people recognize the company does not need more mainline East Coast service, therefore, to have a legitimate threat to move the flying it would have to go westward. However, for a proposed gate sale to occur without creditors committee or bankruptcy court approval, United must first emerge from bankruptcy, which keeps getting delayed.

However, what I find curious is why did United management leak the information to Micheline Maynard, Susan Carey, Kathy Fieweger, and John Carpenter all in the same day?

Obviously, Glenn Tilton wanted maximum exposure, but it occurred the day after the Senate adjourned without pension relief. Therefore, what's the point of purposely leaking the information? If you felt your application was strong, then why leak the information instead of just filing the application -- omitting the areas that have a hole, which could be filled in later?

Regards,

Chip

 

[USA320Pilot]

Funnyguy2:

Getting a commitment for a government backed loan where the assets are colateralized is not a big deal. Where's the risk for the financier with the government guaranteeing the loan?

The bigger issue is getting the loan guarantee approved, which could be more difficult.

Moreover, let's see what happens when the DIP of up to $1.5 billion has to be re-paid and the company entertains an equity investor, just like Air Canada and US Airways did in their formal reorganizations.

The bigger issue is filing a POR that gets approved by the creditors committee and the bankruptcy court, which will require resolution to the pension, 174 EETCs, UCT airport municipal bond litigation, the new antitrust investigation, and the Mesa/ACA/Dulles problem.

If a deal occurs, it will likely be aligned with the POR.

Regards,

Chip

 

[Cosmo]

However, what I find curious is why did United management leak the information to Micheline Maynard, Susan Carey, Kathy Fieweger, and John Carpenter all in the same day?

Chip:

You're assuming that United leaked the financing information when it could have just as easily come from one of the banks. After all, IIRC the Managing Director of J. P. Morgan Chase was the only person quoted by name in the articles. Do you have any factual basis for your unequivical statement that United was the source of the leaked information?

 

[Fly]

Chip - YOUR DEAD WRONG! as usual






____________________________________________________

Never underestimate the value of consistency

 

[Cosmo]

Moreover, let's see what happens when the DIP of up to $1.5 billion has to be re-paid and the company entertains an equity investor, just like Air Canada and US Airways did in their formal reorganizations.

Chip:

It really gets tiresome having to repeat the same information to you over and over again. I can only assume that you purposely ignore such information when it does not comport with your pre-conceived notions about United's future. But whatever the reason, here it is one more time for you, Chip:

1.) United's outstanding DIP balance at this time is approximately $700 million, and all indications (like positive cash flow) are that it will not increase between now and United's exit from Chapter 11. In fact, it might actually be paid down somewhat from the current amount. So while the carrier does indeed have to repay the DIP borrowings, which could have been as much as $1.5 billion, after deducting the repayment from the $2.0 billion loan United will still have $1.3 billion to add to its cash holdings. And since its cash holdings are currently about $2.5 billion, United will then have cash totaling at least $3.8 billion. So why don't you stop trying to give the impression that United will clear only $0.5 billion from the bank loan, and simply refer to the currently-outstanding amount that must be repaid?

2.) As I pointed out to you on another thread, United's unsecured creditors do not want the carrier to arrange equity financing. I even quoted the lawyer for the unsecured creditors committee to that effect. And remember, these are the folks that will be voting on United's POR. So why do you keep insisting that United will need an equity investor in order to emerge from Chapter 11? The fact that both US Airways and Air Canada sought (and got) an equity investor does not mean that United is required to do so, as you seem to imply. Moreover, it is not an ATSB requirement that United's loan application include participation by an equity investor. And your repeated discussion of United's supposed need for one or more equity investors (like Bronner) does not change that fact.

I hope that helps to clear some things up for you, Chip.

 

[767jetz]

Chip answers: United's $2.0 billion loan guarantee will be used to pay back up to $1.5 billion in DIP financing,

Chip, you are wrong again.

United has only drawn about half of the $1.5 Billion DIP financing, and I understand some of that has already been paid back, so MOST of the new $2 Billion loan will go into UA's coffers.

When will you stop posting misinformation and start admitting when you are wrong?

By the way, who was the first to say on these boards that United will obtain exit financing without an equity sponsor? Here's a clue: It certainly wasn't you!

In fact, it was Chip Munn who claimed over and over again that "United is unable to obtain exit financing." Those were your words. Are you now going to deny having said that? Can you be big enough to admit you were wrong? (I doubt it.)

Didn't I tell you that although there was no public disclosure about exit financing, that there WERE indeed lenders talking with UA behind closed doors, and when the time was right you would hear about it?

Also notice that the POR that the Citigroup and JP Morgan saw while negotiating included only modest pension relief, modest stock market results, and very conservative revenue projections. They seem to be confident that the expense is manageable into the future.

A final point is that 20% instead of the traditional 10% of the $2 Billion loan will be unsecured. This represents a $400 Million vote of confidence by the lenders!

As the REAL story emerges, you start to look more and more foolish my friend.

 

[767jetz]

Moreover, let's see what happens when the DIP of up to $1.5 billion has to be re-paid and the company entertains an equity investor, just like Air Canada and US Airways did in their formal reorganizations.

Chip,

Why do you keep spreading misinformation like this? You have been told numerous times that you are dead wrong on this, yet you continue to spread lies.

United has NEVER drawn the full amount of the available DIP financing. UA used up less than half of that $. It will repay about $600- $700 Million. THAT'S IT!

This will leave UA with a cash position in excess of $3.8 - $4.0 BILLION!

Additionally the lenders themseves have publicly indicated in just the last few days that they have no intention of considering an equity investor. It is NOT a requirement of the ATSB. Just because USAir and Air Canada needed equity investors, doesn't mean UA will.

When will you stop spreading this misinformation and start admitting that you are dead wrong?

 

[Bear96]

1. ... United is going to have a smaller fleet and operation upon emergence ...

2. ...on October 1 US Airways took custody of two United gates in Seattle and the Arlington-based airline will do the same thing in Los Angeles and San Francisco after the first of the year...

1. Chip are you saying UA will shrink even further with regards to fleet and route before emerging, or are you talking about the shrinking that has already happened?

2. Oh my... "took custody..." sounds rather dramatic. Did U march in to SEA and lead away a couple of gates at gunpoint? Hope they read them their Miranda rights...

 

[TravelDude]

Chip why do you hate UA so much? You cannot possibly be an employee of UA! If you are you should quit, you must really hate it here. Your posts are always so negative.

 

[Fly]

TravelDude - Chip is NOT an employee of United. He's a pilot at US Air...he used to fly for United but left to work at U. I believe he's afraid he made a mistake leaving and wants to see United fail so he won't have to face that realization. Scary (I know) but he wants, desperately, to see 62,575 people out of work so that he can feel good about himself. :blink:

 

[TravelDude]

Fly, thanks for the reply, that explains it all! In my opinion, he made a mistake switching carriers. MY OPINION!

 

[iflyjetz]

Fly, thanks for the reply, that explains it all! In my opinion, he made a mistake switching carriers. MY OPINION!

I was told long ago that, in the airline industry, you never know if you made the correct choice (of carrier) until the day that you retire. Even then, you can't be 100% sure.
I believe that Chip worked at UAL for a short period of time before jumping over to U. Chip, would you care to educate us on your time at UAL and when you left to go to U?