ATA disclosure statement approved; confirmation hearing Jan. 30

By Caroline Salls

Pittsburgh, Dec. 14 - ATA Holdings Corp.'s disclosure statement for its first amended plan of reorganization was approved Wednesday by the U.S. Bankruptcy Court for the Southern District of Indiana.

The plan of reorganization confirmation hearing is scheduled for Jan. 30. According to a company news release, if the plan is confirmed, the company expects to emerge from Chapter 11 by the end of February.

The court also approved a restructured codeshare agreement with Southwest Airlines, a Chicago-Midway gate transaction and interim debtor-in-possession financing to be provided by MatlinPatterson Global Opportunities Partners II, the release said.

On Nov. 10, ATA announced that it had obtained a commitment from MatlinPatterson for $30 million in DIP financing, which would convert into equity of the reorganized company upon ATA's emergence from its Chapter 11 case.

MatlinPatterson has also tendered a commitment to invest or backstop up to $70 million in additional equity upon exit from Chapter 11, for a total equity investment of $100 million.

MatlinPatterson committed to provide up to $120 million in equity and debt financing to the reorganized company, consisting of the new DIP facility, the outstanding balance of which will be converted into new DIP shares, a cash investment of up to $50 million in new shares and a commitment to act as the exclusive standby purchaser for the remainder of any rights offering new shares that were not subscribed for in the $20 million rights offering.

In addition, MatlinPatterson agreed to provide an additional $20 million exit facility.

Under the amended plan, the $30 million DIP will be exchanged for new DIP shares and new investor shares. The new investor shares represent the investment of up to $70 million in the form of an equity investment and the standby purchase commitment for any unsubscribed rights offering shares.

As a result of its investment in the new holding company, the new investor will hold between 78.2% and 97.8% of the outstanding new shares and between 71.2% and 89.0% on a fully diluted basis.

In addition to the investment, qualified holders may purchase rights offering new shares representing 19.6% of the outstanding new shares and 17.8% on a fully diluted basis.

The reorganization includes substantive consolidation of the company.

Creditor treatments

Treatment of claims is as follows:

• The $140 million ATSB secured loan claim will be repaid with $4.5 million in cash and be reinstated for 100% recovery;

• Secured claims A and B against the aircraft fleet will be paid through new fleet notes A and B for 100% recovery;

• Southwest Airlines' will receive cash and satisfactory protection in regards to the $7 million Chicago letter of credit in full satisfaction of its $47 million DIP facility claim;

• Holders of new DIP facility claims will receive 100% recovery in new DIP shares;

• Holders of general unsecured claims will receive new shares in the reorganized company for a 0.2% recovery;

• Holders of preferred stock and common stock will receive nothing.

"In any complex restructuring process, balancing the concerns of all interested constituencies to create a fair and equitable arrangement poses a significant challenge," chief financial officer Frank Conway said in the release.

"Through the compromise reached with our unsecured creditors, we provide this group with a meaningful equity stake in the newly reorganized company.

"This fact, combined with our ability to reach an agreement with MatlinPatterson, gives us the confidence that we have created the best possible outcome while establishing a solid foundation to support the new company's success moving forward."

ATA Holdings Corp., ATA Airlines' parent, filed for bankruptcy on Oct. 26, 2004. The Dulles, Va.-based company's Chapter 11 case number is 04-19866.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.