United Air Lines seeks approval to sell two Air Canada claims to Deutsche Bank

By Jeff Pines

Washington, Sept. 7 - United Air Lines parent UAL asked the U.S. Bankruptcy Court for the Northern District of Illinois Friday to let it sell two Air Canada claims to Deutsche Bank.

The bankruptcy of Air Canada Inc., which filed for protection under Canada's bankruptcy laws on April 1, 2003, will result in United getting stock and rights to buy stock in the Canadian airline's new parent corporation.

United has two claims against Air Canada, one for C$186.98 million and the second for C$2.25 million, which are general unsecured claims eligible for shares and rights. The claims are based on amounts Air Canada owes United for missing lease payments on three Airbus 330 contracts.

United is conditionally authorized to get 986,986 new shares if it exercises its rights to buy shares. The exact number of shares the company will get is still to be determined.

The airline held an auction for the rights with Deutsche Bank, Bear Stearns, Merrill Lynch and Long Acres LLP.

Deutsche Bank bid C$22 for the shares and C11.875 cents on the dollar for the claims for a total purchase price of C$44.18 million.

United filed for bankruptcy on Dec. 9, 2002. Its Chapter 11 case number is 02-48191.

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