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UAL asks court to extend exclusivity to Dec 31 to file a plan
By Jeff Pines
Washington, Aug. 9 - UAL Corp. asked the U.S. Bankruptcy Court late Friday to extend the company's exclusive right to file a reorganization plan until Dec. 31 and to give it until March 31, 2005 to solicit votes for the plan.
Its current exclusive period to file a plan ends Aug. 30, and the period to solicit votes ends Nov. 30.
The parent to United Air Lines said it needs the extension because it had put all of its efforts into obtaining an Air Transportation and Stabilization Board-backed guarantee for its exit financing. The board decided not to give UAL its backing.
Without the federal government's backing in a world of fierce competitors and high fuel prices, the company said it needs more time to develop a plan that commercial bankers will be willing to finance.
In the filing, Elk Grove, Ill.-based UAL said its debtor-in-possession lenders have agreed to give it until June 30, 2005.
The company said it will begin renewed negotiations to see if its DIP lenders will consider providing it with exit financing. It also said it will reach out to traditional lenders who are not DIP lenders and non-traditional investors, if necessary, to gauge their interest.
UAL said it would consider contacting equity investors only if necessary.
In a separate Friday filing with the court, UAL said it is seeking to increase its debtor-in-possession term loan by $500 million to $800 million. If approved by the court, this amendment would put the company's DIP debt back over $1 billion.
The lenders, which include JPMorgan Chase Bank and Citicorp, have also agreed to lower UAL's interest rate to Libor plus 500 basis points with a 300 basis point Libor floor.
The proposed amendment will cost UAL $6.75 million in fees.
An Aug. 20 hearing is scheduled.
UAL filed for bankruptcy on Dec. 9, 2002 with the U.S. Bankruptcy Court for the Northern District of Illinois. Its Chapter 11 case number is 02-48191.
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