US Airways files amended reorganization plan, replacing rights offering with stock proposal

By Caroline Salls

Pittsburgh, Aug. 8 - US Airways Inc. filed its second amended plan of reorganization and disclosure statement that replaces a rights offering under the company's merger agreement with America West Group Holdings with a proposed stock offering, according to a Sunday 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 Tuesday.

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 30% of the unsecured creditors' 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 3.1% and 17.4%. These claims are estimated to be between $408.5 million and $1.24 billion.

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 investments and participation by suppliers and business partners that will provide the company with more than $1.5 billion in new liquidity 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 37% 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 52% of the group.

Also under the plan, the reorganized group may conduct a stock offering to purchase up to $150 million in shares of new common stock to some US Airways creditors, a portion of which may be offered to existing common stockholders of America West.

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

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