Hawaiian Airlines reorganization plan confirmed, creditors to get 100 cents on the dollar

By Ted A. Knutson

Washington, March 11 - Creditors of Hawaiian Airlines, Inc. will receive 100 cents on the dollar in a Chapter 11 reorganization plan for the airline confirmed by the U.S. Bankruptcy Court for the District of Hawaii judge Robert Faris late Thursday.

An order giving formal legal weight to the plan will wait until labor contracts negotiated for flight attendants and pilots are ratified by union members.

Creditors should get their money the first week of April when Hawaiian Air is expected to exit bankruptcy, said Jason Reese, president of Imperial Capital LLC, the investment banker for Ranch Capital which controls the airline's holding company.

Imperial Capital is finalizing the paperwork for investors who agreed to purchase $100 million in convertible senior unsecured notes due 2010.

Work is also being completed on a $50 million bank loan package consisting of a $25 million senior secured revolving credit facility and a $25 million senior secured term loan. Wells Fargo Foothill is the lead lender.

After two bankruptcies in two decades, the Honolulu-based carrier is in good shape to avoid another landing in bankruptcy court because it has low leverage, the "right" aircraft, a focus on being the low cost provider in a niche market and plenty of liquidity, Reese told Prospect News.

He pointed out when the airline leaves bankruptcy it will have $90 million in unrestricted cash, $40 million in restricted cash and what he described as a modest $125 million of funded debt

The carrier's bankruptcy case number is 03-00827.

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