ATA gets commitment for $30 million DIP, $70 million exit equity investment from MatlinPatterson

By Caroline Salls

Pittsburgh, Nov. 10 - ATA Holdings Corp. requested approval of an agreement in principle with MatlinPatterson Global Opportunities Partners II for $30 million in for debtor-in-possession financing, according to a company news release.

In addition to the DIP financing, MatlinPatterson has tendered a commitment to invest up to an additional $70 million in equity upon ATA's emergence from its Chapter 11 case.

Upon exit from Chapter 11, the $30 million DIP financing would convert into equity of the reorganized company. In addition, MatlinPatterson would invest or backstop up to $70 million in additional equity, for a total equity investment of $100 million.

"MatlinPatterson's commitment represents a watershed event for ATA and will provide a firm basis for the sustainable reorganization of the company," chief financial officer Frank Conway said in the release.

The agreement with MatlinPatterson would support ATA's continued operations in scheduled service, military and commercial charter operations.

In connection with the anticipated MatlinPatterson investment and ATA's emergence from Chapter 11, ATA is also engaged in discussions with Southwest Airlines concerning their current codeshare agreement.

"With the commitment for this capital investment, we are on the path to emerge from bankruptcy in early 2006," ATA president and chief executive officer John Dennison said in the release.

ATA Holdings Corp., ATA Airlines' parent, filed for bankruptcy on Oct. 26, 2004 in the U.S. Bankruptcy Court for the Southern District of Indiana. The Dulles, Va.-based company's Chapter 11 case number is 04-19866.

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