US Airways files first amended reorganization plan to reflect changes to merger agreement

By Caroline Salls

Pittsburgh, July 28 - US Airways Inc. filed its first amended plan of reorganization and disclosure statement that reflects stock and commitment amount changes to the company's merger agreement with America West Group Holdings, according to a Wednesday 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.

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. Their recovery is expected to be between 3.3% and 8.3%.

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 $565 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 36.7% of the new common stock of the reorganized group.

In addition, the plan contemplates that some new equity investors will invest at least $565 million in new common stock of the reorganized group, representing 51.7% of the group.

About 11.6% of the new common stock will be distributed to holders of between $2.89 million and $4.02 million in unsecured claims.

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.

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

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