Frontier Airlines Holdings has received a firm commitment for $40 million in post-petition debtor-in-possession (DIP) financing from Republic Airways Holdings. The DIP facility is subject to bankruptcy court approval and other pre-closing conditions.
"Since filing for Chapter 11 protection, we have lowered our unit costs, right-sized the operation to adjust for a challenging economic climate, improved our unit revenue performance and customer product satisfaction with the introduction of AirFairs and maintained sufficient liquidity to execute upon our business plan," said Sean Menke, Frontier president and chief executive officer. "This financing commitment is a tremendous vote of confidence in the company's plan and validates our employees' significant efforts during the restructuring. This new DIP facility refinances the existing DIP loan that matures in April 2009, increases the available financing compared to the expiring DIP loan and preserves our financial stability as we seek a plan sponsor to emerge from bankruptcy later this year."
Upon court approval, Republic will provide immediate funding of $40 million to refinance the expiring DIP facility and to support Frontier's additional working capital needs. As a condition to the loan, Frontier has agreed to allow Republic a stipulated damage claim in the amount of $150 million.
"The employees and management team at Frontier deserve a lot of respect for their comprehensive efforts to restructure their airline amid very difficult economic circumstances," said Republic president and chief executive officer, Bryan Bedford. "We believe Frontier is on the right path to emerge from bankruptcy this summer as a very efficient, low-cost airline."
Frontier and its subsidiaries filed voluntary petitions for reorganisation under Chapter 11 of the US Bankruptcy Code on 10 April 2008. The company received a total of $30 million in DIP funding from Republic as well as Credit Suisse Securities and AQR Capital in August 2008. Frontier will retire that debt by the end of March.
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This week on the Shephard Defence Podcast, senior naval reporter Harry Lye and military training & simulation reporter Norbert Neumann chat with Professor John Louth.
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