UAL requests emergency approval of DIP amendment to reduce interest rate, up commitment

By Caroline Salls

Pittsburgh, July 14 - UAL Corp. requested emergency approval of its 12th amendment to its $1 billion debtor-in-possession facility that seeks to increase the commitment by $310 million, extend the maturity and reduce the interest rate by 25 basis points, according to a Wednesday filing with the U.S. Bankruptcy Court for the Northern District of Illinois.

Under the amendment, the facility's tranche A loan will be sized at $200 million and tranche B at $1.1 billion, increasing the total facility to $1.3 billion.

The interest rate will be reduced to Libor plus 425 bps from Libor plus 450 bps.

The maturity will be extended to Dec. 30 from Sept. 30, with an option to extend it to March 31, 2006 if no event of default exists.

Also under the amendment, UAL will have until Aug. 31 to file its business plan to club DIP lenders and must maintain a minimum cash covenant of at least $750 million.

UAL said it needs additional DIP financing to provide a stable environment needed to complete its restructuring efforts and to assist it in meeting liquidity needs "during this crucial stage of the Chapter 11 cases."

UAL's original DIP was approved in two parts, a $1.2 billion club facility and a $300 million term loan, which has since been paid off.

A hearing on the amendment is scheduled for Friday.

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

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