F9 gets D.I.P. financing for Chapter 11 exit
#1
Original Poster
Join Date: Jan 2006
Location: CONUS
Posts: 947
F9 gets D.I.P. financing for Chapter 11 exit
A lot of people have erroneously said Frontier was day-to-day. This will shock them. The airline has received debtor-in-possession financing.
DENVER, July 25 /PRNewswire/ -- Frontier Airlines Holdings, Inc. today announced it has received a $75 million commitment in post-petition debtor-in-possession (DIP) financing from Perseus LLC, a private investment firm based in Washington, D.C. with offices in Evergreen, Colorado, New York and Munich. Perseus has also agreed to serve as equity sponsor for Frontier's plan of reorganization, allowing Perseus to purchase 79.9% of the equity in the reorganized company for $100 million. The DIP facility and plan sponsorship are subject to bankruptcy court approval and to various conditions.
"Today's announcement is a major boost to Frontier and builds momentum toward its emergence from bankruptcy as a viable enterprise. The $75 million commitment in DIP financing from Perseus is a significant vote of confidence in the employees of Frontier, our product and business plan," said Sean Menke, Frontier President and Chief Executive Officer. "Despite the current challenges facing the airline industry, these transactions help point the way towards Frontier's emergence from bankruptcy as a competitive, sustainable airline."
"We are enthusiastic about the opportunity to invest in the future of Frontier," said Brian Leitch, Senior Managing Director of Perseus. "We believe that Frontier has the highest-quality affordable coach product in the domestic airline industry. We are impressed by Frontier's excellent employees and friendly customer service, as well as the numerous product characteristics that distinguish Frontier from its competitors. Industry data supports our conclusion that when given a choice, the majority of coach travelers prefer Frontier over the competitive options. The airline industry is in a state of transition and some degree of turmoil. Although Frontier has been buffeted by recent fuel price increases and certain other issues, we believe that Frontier has proven that it deserves a chance to succeed in this challenging market, and we are proud to help it do so."
Leitch continued, "We have named our acquisition affiliate Go Flip Go, L.L.C, as a symbol of our desire to encourage and preserve Frontier's unique cultural attributes. Of course, we also want to support Larry, Hector, Grizwald, Jack, Sally, the penguins and all the other Frontier animals."
Frontier filed a motion today with the U.S. Bankruptcy Court for the Southern District of New York. Upon court approval, Perseus will provide funding under the proposed DIP credit facility in two installments to support the company's working capital needs.
The proposed DIP funding, coupled with Frontier's negotiations with partners to improve liquidity, reduce expenses, and preserve cash, is expected to provide sufficient working capital for the Company's operations. The Company continues to work with its partners and employees to obtain additional liquidity, reduce expenses and enhance revenues.
"We are grateful that many of our key vendors and business partners, as well as all of our employees, have stepped up and made financial sacrifices to help provide Frontier with a lot of staying power," Menke said. "Through a variety of transactions and business initiatives, we have improved our liquidity over a very short period of time. All of this support reaffirms the fundamental business changes we have been making since the beginning of the year. We continue to adjust capacity and realign our route network to leverage our brand strengths and market awareness during a period of severe industry turmoil."
DENVER, July 25 /PRNewswire/ -- Frontier Airlines Holdings, Inc. today announced it has received a $75 million commitment in post-petition debtor-in-possession (DIP) financing from Perseus LLC, a private investment firm based in Washington, D.C. with offices in Evergreen, Colorado, New York and Munich. Perseus has also agreed to serve as equity sponsor for Frontier's plan of reorganization, allowing Perseus to purchase 79.9% of the equity in the reorganized company for $100 million. The DIP facility and plan sponsorship are subject to bankruptcy court approval and to various conditions.
"Today's announcement is a major boost to Frontier and builds momentum toward its emergence from bankruptcy as a viable enterprise. The $75 million commitment in DIP financing from Perseus is a significant vote of confidence in the employees of Frontier, our product and business plan," said Sean Menke, Frontier President and Chief Executive Officer. "Despite the current challenges facing the airline industry, these transactions help point the way towards Frontier's emergence from bankruptcy as a competitive, sustainable airline."
"We are enthusiastic about the opportunity to invest in the future of Frontier," said Brian Leitch, Senior Managing Director of Perseus. "We believe that Frontier has the highest-quality affordable coach product in the domestic airline industry. We are impressed by Frontier's excellent employees and friendly customer service, as well as the numerous product characteristics that distinguish Frontier from its competitors. Industry data supports our conclusion that when given a choice, the majority of coach travelers prefer Frontier over the competitive options. The airline industry is in a state of transition and some degree of turmoil. Although Frontier has been buffeted by recent fuel price increases and certain other issues, we believe that Frontier has proven that it deserves a chance to succeed in this challenging market, and we are proud to help it do so."
Leitch continued, "We have named our acquisition affiliate Go Flip Go, L.L.C, as a symbol of our desire to encourage and preserve Frontier's unique cultural attributes. Of course, we also want to support Larry, Hector, Grizwald, Jack, Sally, the penguins and all the other Frontier animals."
Frontier filed a motion today with the U.S. Bankruptcy Court for the Southern District of New York. Upon court approval, Perseus will provide funding under the proposed DIP credit facility in two installments to support the company's working capital needs.
The proposed DIP funding, coupled with Frontier's negotiations with partners to improve liquidity, reduce expenses, and preserve cash, is expected to provide sufficient working capital for the Company's operations. The Company continues to work with its partners and employees to obtain additional liquidity, reduce expenses and enhance revenues.
"We are grateful that many of our key vendors and business partners, as well as all of our employees, have stepped up and made financial sacrifices to help provide Frontier with a lot of staying power," Menke said. "Through a variety of transactions and business initiatives, we have improved our liquidity over a very short period of time. All of this support reaffirms the fundamental business changes we have been making since the beginning of the year. We continue to adjust capacity and realign our route network to leverage our brand strengths and market awareness during a period of severe industry turmoil."
#6
Join Date: Feb 2003
Location: Washington, DC, USA
Posts: 739
I think you've missed the point here. The existing shares will be worth nothing after the reorganization is complete.
The $100m will be the 79.9% of the capital of the new company after it exits bankruptcy. The remainder of the ownership would presumably go to other investors, management and employees.
The $100m will be the 79.9% of the capital of the new company after it exits bankruptcy. The remainder of the ownership would presumably go to other investors, management and employees.
#7
Join Date: Nov 1999
Programs: UA, DL, AA, Sutherlands Lumber
Posts: 7,359
I think you've missed the point here. The existing shares will be worth nothing after the reorganization is complete.
The $100m will be the 79.9% of the capital of the new company after it exits bankruptcy. The remainder of the ownership would presumably go to other investors, management and employees.
The $100m will be the 79.9% of the capital of the new company after it exits bankruptcy. The remainder of the ownership would presumably go to other investors, management and employees.
#8
Join Date: Nov 1999
Programs: UA, DL, AA, Sutherlands Lumber
Posts: 7,359
#9
Join Date: Nov 1999
Programs: UA, DL, AA, Sutherlands Lumber
Posts: 7,359
Three questions:
1) Does Frontier stock have any value now, and why?
2) Why would stockholders approve if they are going to get stiffed?
3) If stockholders don't decide on this, who does?
Last edited by pierre mclopez; Jul 26, 2008 at 9:39 am
#10
Join Date: Nov 2007
Location: Downtown Denver
Programs: WN A-list/CP, HHonors Diamond, IHG Plt,*wood Plt,F9 Summitt, Hyatt Diamond,
Posts: 391
Great, I just booked 3 more F9 Flights. F9 lives to battle WN another day, F9 has been less recently but held back to book flights. Every flight last week was packed full. They may make it after all, Great!
Best part for me they finally got rid of the Q400 @ ABQ. They are viable for me again........
Best part for me they finally got rid of the Q400 @ ABQ. They are viable for me again........
#12
Join Date: Jan 2008
Posts: 27
http://www.flyertalk.com/forum/showthread.php?t=827754
In my opinion, you're bizarrely obsessed with this.
http://flyertalk.com/forum/showthrea...781&highlight=
F9 wasn't near ceasing operations the last time you asked, and they aren't now either.
http://flyertalk.com/forum/showthrea...781&highlight=
F9 wasn't near ceasing operations the last time you asked, and they aren't now either.
I agree you seem obsessed. Why is it that you are so anxious for this airline to fail? There are real people (customers and employees) who would be affected.
#13
Join Date: Feb 2008
Location: Mountain West USA
Posts: 436
In bankruptcy, stockholders are the last whose claims will be fulfilled and most often their stocks are simply wiped out and they loose their money. Frontier's stock is basically worthless right now, has been delisted, and while the fate has not be decided, this deal makes it very difficult to see how any stockholders would be able to recover anything.
#15
Join Date: Nov 2007
Location: Downtown Denver
Programs: WN A-list/CP, HHonors Diamond, IHG Plt,*wood Plt,F9 Summitt, Hyatt Diamond,
Posts: 391