UAL launches credit agreement amendment to increase commitment, extend maturity

By Caroline Salls

Pittsburgh, June 27 - UAL Corp. proposed an amendment to its revolving credit, term loan and guaranty agreement with United Air Lines Inc., JPMorgan Chase Bank NA and Citicorp USA Inc. that would waive events of default, increase the commitment and extend the maturity, according to an 8-K filing with the Securities and Exchange Commission.

UAL launched the amendment process Monday in a conference call with loan lenders.

The amendment is subject to the approval of the lenders under the credit agreement and the U.S. Bankruptcy Court for the Northern District of Illinois.

The amendment includes:

* Waivers of any events of default related to technical matters, including any agreements to acquire aircraft;

* A $310 million loan commitment increase, with the tranche A loan sized at $200 million and the tranche B loan sized at $1.1 billion, increasing the total commitment to $1.3 billion;

* Extension of the maturity date to Dec. 30, including an option to extend the term until March 31, 2006;

* Maintenance of the minimum cash covenant to hold cash and cash equivalents (other than escrow accounts) to at least $750 million;

* Providing for a new capital expenditure basket for some aircraft purchases, including a cash sublimit and financing requirement for the balance of the purchase price; and

* Technical matters related to foreign slots, routes and the engines and spare engines that serve as collateral for the loans under the agreement.

The Chicago-based parent of United Air Lines filed for bankruptcy on Dec. 9, 2002. Its Chapter 11 case number is 02-48191.

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