UAL gets lender okay to increase DIP by $500 million

By Sara Rosenberg

New York, July 23 - UAL Corp.'s plea to investors Thursday to increase its debtor-in-possession facility by $500 million proved successful as the company announced Friday that the amendment was approved by lenders.

However, the DIP increase still needs to get bankruptcy court approval, which will be sought at the omnibus hearing currently scheduled for Aug. 20.

JPMorgan Chase, Citigroup and CIT are the lead banks on the deal and GE Capital signed on as a new lender, according to a company news release.

The DIP matures on June 30, 2005, giving the company additional flexibility as it moves to assemble an exit-financing package. Under the amendment, the facility maintained "the favorable interest rates and types of covenants" established in the May amendment, the release said.

"Without the Air Transportation Stabilization Board (ATSB) loan guarantee, we need to do more restructuring and cost reduction work to formulate a business plan that will attract the financing necessary to exit Chapter 11. The amended DIP gives us the time and money to do this essential work in a systematic and measured way," executive vice president and chief financial officer Jake Brace said in the release.

"The willingness of lenders to participate in the amended DIP following the denial of the federal loan guarantee reflects their confidence in our financial performance and ability to become more competitive by further improving our cost structure."

Elk Grove Township, Ill., airline carrier UAL filed for Chapter 11 on Dec. 9, 2002.

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