ATA Holdings closes DIP financing

By Jeff Pines

Washington, Nov. 17 - ATA Holdings Corp. said its subsidiary ATA Airlines Inc. closed a more than $15 million debtor-in-possession financing facility with the Indiana Transportation Finance Authority.

According to the company, the deal required it to sell aircraft parts, free and clear of any liens to the ITFA. The authority then leased the property to the Indianapolis Airport Authority, which in turn leased the parts to ATA.

Indianapolis-based ATA is obligated to repurchase the parts on the closing of a sale of its Chicago-Midway Airport operations to AirTran Airways, or whoever wins the auction, expected next month, or Feb. 15, 2005, whichever is the earlier.

As part of the repurchase of the property, ATA will pay Libor plus 50 basis points on the fund provided by ITFA.

Part of the deal is that the airline agreed to stay in Indianapolis, maintain its hub operations at the city's airport, continue service in the state and retain a substantial number of Indianapolis-based employees. If ATA breaks the agreement, it will have to pay a $1.5 million fee to the city and the state.

ATA filed for bankruptcy on Oct. 26. Its Chapter 11 case number is 04-19866.

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