UAL asks DIP lenders to cut pricing, extend maturity and change EBITDAR covenant

By Sara Rosenberg

New York, Jan. 26 - United Airlines Inc.'s parent, UAL Corp., held a conference call on Wednesday morning asking lenders under its debtor-in-possession financing facility to lower interest rates, extend the maturity and adjust the EBITDAR covenant, according to sources.

JPMorgan and Citigroup are the lead banks on the deal, with JPMorgan the left lead.

The company is looking to reprice its entire $1 billion DIP, comprised of an $800 million term loan and a $200 million revolver, at Libor plus 450 basis points from Libor plus 500 basis points and is also asking to remove the 3% Libor floor that is in place.

In addition, UAL wants to extend the DIP's maturity date to Sept. 30 from June 30.

Lastly, the company is looking to adjust its EBITDAR covenant lower to adjust for "business issues," one source said.

"Not a lot of reaction on the call," a buyside source said. "But, a few lenders expressed their opinion that this situation doesn't warrant a pricing reduction. I'd have to agree with them."

For the repricing and the removal of the Libor floor, the company needs 100% lender approval. For the covenant changes, the company only needs 51% approval.

No amendment fee is being offered to lenders.

Consents are due Feb. 9.

UAL, an Elk Grove Township, Ill., airline carrier, filed for Chapter 11 on Dec. 9, 2002.

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