US Airways said that no other competing bids were received by the court-imposed deadline of November 15, 2002. The company said it expects to unveil its reorganization plan in mid-December 2002 – four months after filing for bankruptcy – and currently plans to emerge from Chapter 11 in the first quarter of 2003.
In September, US Bankruptcy Judge Stephen Mitchell approved RSA’s proposed investment agreement and the terms for a competitive bidding process to allow the airline to consider higher or otherwise better equity investment offers.
“Designation of RSA as equity sponsor reaffirms our commitment to a ‘fast-track’ emergence from bankruptcy and a successful restructuring of our business,” David Siegel, president and chief executive officer of US Airways said in a statement. “RSA has demonstrated a strong commitment to our vision for a reorganized and highly competitive airline, and our management team looks forward to working with them as we chart a path for success and profitability.”
The formal selection of RSA has been endorsed by the Committee of Unsecured Creditors appointed by the bankruptcy judge to represent the interests of creditors during the reorganization.
Pension Fund Gets 37.5%
RSA agreed to invest $240 million for approximately 37.5% ownership interest in the restructured US Airways. This percentage of equity ownership is subject to change based upon the final plan of reorganization, the company announcement said.
US Airways also said RSA has underwritten a $500 million debtor-in-possession (DIP) financing facility. So far, the airline has drawn $300 million on the $500 million DIP loan.
The company said the remaining $200 million can be tapped when US Airways meets certain remaining agreements for a $900 million federal guarantee of a $1 billion loan, which has been given conditional approval by the Air Transportation Stabilization Board (ATSB).
RSA also continues to hold approximately $340 million of debt obligations related to US Airways’ aircraft, the company said.
The pension fund’s bid, which was announced in September, topped an earlier offer for a similar stake led by financier David Bonderman’s Texas Pacific Group, an investment firm with experience resurrecting troubled airlines. (See Alabama Makes Bid for US Airways ).
At first, the company tried to fight off the RSA bid, but later changed course and embraced it. (See US Airways Reverses Course; Works Out RSA Deal ).
US Airways has slashed at least $1.3 billion in annual expenses, through widespread wage cuts and renegotiated debt agreements, to lighten its hefty cost structure.
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