F9 gets D.I.P. financing for Chapter 11 exit

Old Jul 25, 08, 9:50 am
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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."
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Old Jul 25, 08, 1:28 pm
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If I've figured right, that's over $3/share.
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Old Jul 25, 08, 1:48 pm
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Nice to hear that they should have a chance now to get out of bancrupcy. Just curious how much of F9 will be left.
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Old Jul 25, 08, 2:16 pm
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So am I reading this right? $75mil in operating investment and then another $100mil to purchase a majority share of F9?
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Old Jul 25, 08, 3:22 pm
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Price to book of 0.06 leaves a little wiggle room.
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Old Jul 25, 08, 4:59 pm
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Originally Posted by pierre mclopez View Post
If I've figured right, that's over $3/share.
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.
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Old Jul 25, 08, 9:57 pm
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Originally Posted by TechBoy View Post
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.
Thanks for the head's up. If you are right, the lesson will be worth cost. I'll sure be watching.
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Old Jul 26, 08, 6:34 am
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Frontier gets huge cash infusion - Denver Post

Frontier lands $75 million loan - Rocky Mountain News
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Old Jul 26, 08, 6:41 am
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Originally Posted by TechBoy View Post
I think you've missed the point here. The existing shares will be worth nothing after the reorganization is complete...
This is corroborated by news this morning.

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, 08 at 9:39 am
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Old Jul 27, 08, 6:48 pm
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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........
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Old Jul 28, 08, 9:58 am
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If they are burning thru allomost a million dollars a day..how many more days will this give them???
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Old Jul 28, 08, 12:04 pm
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Originally Posted by CAL PHL FLYER View Post
If they are burning thru allomost a million dollars a day..how many more days will this give them???
To quote silverthief2 the last time you showed you obvious bias in the Frontier forum...

http://www.flyertalk.com/forum/showthread.php?t=827754

Originally Posted by silverthief2 View Post
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.
F9 still isn't near ceasing operations.

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.
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Old Jul 28, 08, 10:57 pm
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Originally Posted by pierre mclopez View Post
This is corroborated by news this morning.

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?
The BK judge and the creditor's committee are the groups that decide whether or not the deal goes through.

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.
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Old Jul 28, 08, 10:58 pm
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Originally Posted by loboclone View Post
Best part for me they finally got rid of the Q400 @ ABQ. They are viable for me again........
Didn't that happen a few months ago?
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Old Jul 29, 08, 6:02 am
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Originally Posted by GreatChecko View Post
Didn't that happen a few months ago?
Yes, they pulled the Q400 for the new routes in Colo. ABQ got the A-319's back and the planes are nearly full again on Mondays and Fridays. had to be a big step to regaining customer share from ABQ.
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