ATA requests court OK of $40 million replacement letter-of-credit facility

By Caroline Salls

Pittsburgh, Sept. 6 - ATA Holdings Corp. requested approval of an up to $40 million replacement letter-of-credit facility under its debtor-in-possession financing from agent Wells Fargo Foothill Inc., according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of Indiana.

On Dec. 16, 2004, ATA obtained a letter-of-credit facility from National City Bank of Indiana, which has decided not to renew.

The National City Bank agreement includes about 40 letters of credit and expires Aug. 31, 2006. According to the filing, some of these letters of credit need to be renewed and the renewal dates may extend beyond the expiration of the agreement.

Under the terms of the replacement letter-of-credit agreement, letters of credit can be issued for a minimum of $5 million.

The term on the agreement is the earlier of August 2008 or 40 days after entry of an interim order if a final order has not been entered.

The letter-of-credit fee will be 85 basis points and will increase to 285 bps in the event of a default.

The lender of each letter of credit issued will pay the agent a $3,500 agent's fee.

A hearing is scheduled for Sept. 19.

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.

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