US Airways files plan of reorganization

By Caroline Salls

Pittsburgh, June 30 - US Airways Inc. filed its plan of reorganization and disclosure statement based on its proposed merger with America West Group Holdings, according to a Thursday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The bankruptcy court has set a hearing on approval of the disclosure statement for Aug. 9.

The airlines remain on track to complete all regulatory and court requirements and to close on the merger transaction by late September or early October, according to a company news release.

Under the plan, unsecured creditors having claims of $50,000 or less will receive a cash payment of 10% of the amount of their claim.

Other unsecured creditors will receive stock in the reorganized company. The value of their recoveries will depend on the value of the shares of stock at emergence, as well as the total amount of allowed claims, including the amounts of disputed claims that have not yet been determined.

US Airways and America West will merge. The airlines will operate under the US Airways brand and will be based in Tempe, Ariz.

When completed, the merger will be anchored by $500 million in new equity investment, as well as other potential equity and financing sources still under negotiation, and participation by suppliers and business partners that will provide the company with more than $1.5 billion in cash at the time of the transaction's closing.

America West will become a wholly owned subsidiary of the reorganized group and the existing shareholders of America West will receive about 39% of the new common stock of the reorganized group.

In addition, the plan contemplates that some new equity investors will invest at least $500 million in new common stock of the reorganized group, representing 49% of the group.

About 12% of the new common stock will be distributed to unsecured creditors.

Also under the plan, the reorganized group intends to offer rights to purchase up to $150 million in shares of new common stock to some US Airways creditors and to existing common stockholders of America West at a price of $16.50 per share.

More merger progress

Also this week, the U.S. Department of Justice completed its antitrust review and cleared the proposed merger, according to a company news release.

In addition, the companies have filed registration statements on forms S-4 and S-1 documents with the Securities and Exchange Commission that are necessary steps in the process of completing the merger.

Separately, the period for other potential investors and interested parties to offer competing bids and alternatives for the merger proposal concludes at 5 p.m. ET on Friday, with a hearing set for July 7.

US Airways, an Arlington, Va.-based carrier, filed for bankruptcy on Sept. 12, 2004. Its Chapter 11 case number is 04-13819.

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