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Frontier going after new financing offer

By Chris Walsh, Rocky Mountain News (Contact)

Published August 4, 2008 at 11:12 a.m.
Updated August 4, 2008 at 11:12 a.m.

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Frontier Airlines has received a financing offer from some of its largest creditors that is “materially more favorable” than a competing proposal from investment firm Perseus LLC.

Denver-based Frontier says it now intends to pursue the new offer.

The proposal from creditors “to extend this financing commitment is a tremendous vote of confidence in our company and its business plan,” Sean Menke, Frontier’s president and chief executive officer, said in a statement. “After a careful examination of this offer against the offer Perseus provided last week, we believe this new agreement offers immediate access to greater liquidity under more favorable terms.”

Frontier said in a bankruptcy court filing that the new offer includes lower interest rates, lower fees and borrowing costs as well as less-stringent requirements. The deal also doesn’t require Frontier to give up a majority equity stake, permitting the company “to assess their reorganization options from a position of greater financial strength,” according to the filing.

Frontier would receive $30 million in loans from a group including Republic Airways Holdings, Credit Suisse, Cayman Islands Branch and AQR Capital, among other lenders. Under the other offer, Frontier would get up to $100 million - including an initial loan of $40 million - in exchange for up to 79.9 percent of the reorganized company’s stock.

Frontier recently took steps to increase its cash balance by striking agreements to sell planes. Those moves to increase liquidity helped lead to the new offer, the carrier said in the court documents.

Comments

  • August 4, 2008

    11:43 a.m.

    Suggest removal

    tripleboom writes:

    Glad to hear it! The terms, while not fully disclosed here, certainly have to be better than those proposed by Perseus. Hopefully the Teamsters will like the way this DIP proposal reads.

  • August 4, 2008

    6:05 p.m.

    Suggest removal

    jacka writes:

    Why won't the Teamsters pension fund jump in ... they could pay themselves well, establish worker first policies, unionize the entire company and make a big fat profit?

    Isn't that the story Unions proclaim ... they make life better for the workers and make the company stronger?