ATA executes commitment letter for $30 million DIP, $70 million financing for reorganized company

By Caroline Salls

Pittsburgh, Nov. 30 - ATA Holdings Corp. and ATA Airlines, Inc. obtained court approval Tuesday of a commitment letter with MatlinPatterson Global Opportunities Partners II, LP and MatlinPatterson Global Opportunities Partners (Cayman) II, LP for $30 million in debtor-in-possession financing and up to $70 million in financing for the reorganized company, according to an 8-K filing with the Securities and Exchange Commission.

The DIP facility will be payable in common stock upon ATA's emergence from Chapter 11 bankruptcy.

The $70 million financing will be provided to the new holding company that will be the ultimate parent of reorganized ATA Airlines in the form of an $45 million stock purchase commitment and a $25 million standby purchase commitment for a rights offering to reorganized ATA's unsecured creditors and its subsidiary debtors.

In addition, MatlinPatterson will provide $20 million of exit debt financing.

Maturity on the DIP will be the earlier of March 15 or upon event of default.

According to the DIP term sheet, at the option of the lenders, repayment of the DIP obligations may be deferred to the effective date of a plan of reorganization, at which time MatlinPatterson may exchange the DIP obligations for new stock.

If no DIP event of default occurs, then the outstanding principal and interest of the DIP will be repaid by the issuance of new stock at a conversion ratio of $10.75 per share.

In turn, the principal amount of the DIP will be converted into 27.9% of the new stock.

Interest on the DIP will be 1,000 basis points.

Proceeds will be used for working capital and general corporate purposes.

In addition, the number of shares of new stock issuable to MatlinPatterson upon the DIP conversion and the additional equity investment will be equal to 69.75% of the total number of shares of new stock.

Upon exercise of all of the warrants and the stock options, 60.93% of the outstanding share capital of the parent company will be held by MatlinPatterson plus 20.31% to be held by eligible holders and/or MatlinPatterson under the rights offering.

MatlinPatterson will also have the right to appoint at least five of seven members of the reorganized company's initial board of directors and an equivalent proportion of members of the boards of directors of each of the operating subsidiaries.

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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