UAL files reorganization plan; unsecured creditors to get 4%-7% recovery in new common stock

By Caroline Salls

Pittsburgh, Sept. 7 - UAL Corp. filed its plan of reorganization and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the Northern District of Illinois that gives unsecured creditors all of the new common stock in the reorganized company.

The disclosure statement puts recovery for the $20 billion to $30 billion of unsecured claims at between 4% and 7%.

United intends to exit from bankruptcy early next year, according to a company news release.

Under the plan, the company will issue 125 million shares of new common stock to be distributed to unsecured creditors.

Treatment of creditors under the plan will include:

* Holders of debtor-in-possession claims will receive 100% recovery in cash;

* Holders of secured aircraft claims will receive 100% recovery in reinstatement of their claims or return of collateral;

* Holders of other secured claims will receive 100% recovery in cash or the return of collateral;

* Holders of $20 billion to $30 billion in unsecured claims will receive 4% to 7% recovery in new common stock in the reorganized company;

* Holders of old equity interests, including common stock, preferred stock and 13.25% Trust Originated Preferred Securities will receive no distribution.

The plan will be funded by a $2.5 billion, all-debt exit financing package. United has received proposals from four different institutions for exit financing.

The company is also exploring the possibility of a rights offering under which it would offer unsecured creditors the opportunity to purchase about $500 million in additional new common stock in the reorganized UAL.

The proceeds of the offering would be used to provide additional capital for operational needs and/or to reduce the amount of the exit financing facility, as well as for further strengthening the company's capital structure.

A hearing on approval of the disclosure statement is scheduled for Oct. 11.

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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