ATA plan to be confirmed, expects to emerge in late February

By Caroline Salls

Pittsburgh, Jan. 30 - ATA Holdings Corp. obtained oral confirmation Monday by the U.S. Bankruptcy Court for the Southern District of Indiana of the company's first amended plan of reorganization, with written confirmation expected Tuesday, according to a company news release.

According to the release, the company expects to emerge from bankruptcy in late February.

"Reaching this positive end to the restructuring process is even more rewarding because it is the result of consensual agreements reached between ATA, various stakeholders, interested parties and the unsecured creditors committee," interim chief financial officer Frank Conway said in the release.

"With a strengthened cash balance thanks to our new investment partner MatlinPatterson, a substantially lower CASM due to several cost-saving initiatives, and the right operational plan to leverage our strengths, all the pieces are in place to help secure the company's future," new chief financial officer Doug Yakola said in the release.

As part of the settlement of their claims, unsecured creditors will receive new common stock representing 7% of the outstanding equity in the newly formed privately held holding company New ATA Holdings Corp., which will become the ultimate parent company of ATA Airlines.

In addition, unsecured creditors will receive warrants to acquire 2% of the new common stock.

Also, unsecured creditors will have the opportunity to purchase about $25 million in new common stock for another 2%.

Existing common and preferred stock will be cancelled upon the emergence date, and no distribution will be made to current securityholders.

The plan includes an investment of $95 million from ATA's new investor, MatlinPatterson, consisting of $30 million in debtor-in-possession financing, which will be converted into equity upon emergence, and, upon emergence, $45 million to New ATA Holdings Corp. in the form of an equity investment, reflecting the full subscription of new common stock in the rights offering.

MatlinPatterson will also provide an additional $20 million of exit debt financing.

"During the restructuring, we've made substantial strides in identifying broader and more robust sources of revenue through our enhanced codeshare agreement and strategic route realignment," executive vice president and chief operating officer Subodh Karnik said in the release.

Plan creditor treatment

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.

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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