Delta Air Lines Secures $2.5 Billion Exit Financing (Note 'Standalone')

Delta Airlines (DALRQ-NASDAQ/OTC) has announced this morning that it secured a $2.5 Billion exit financing facility, making it one step closer to exiting bankruptcy in spring as a strong well-capitalized standalone carrier.

Six institutions led the facility: J.P.Morgan, Goldman Sachs & Co., Merrill Lynch, Lehman Brothers, UBS, and Barclays Capital.  The pact will consist of a $1 billion first-lien revolving credit facility, a $500 million first-lien Term Loan A, and a $1 billion second-lien Term Loan B. The facility will be secured by substantially all of the first-priority collateral in the existing debtor-in-possession facilities.  Proceeds from the facility will be used by Delta to repay its $2.1 billion debtor-in-possession credit facilities led by GE Capital and American Express, to make other payments required upon exit from bankruptcy, and to increase its already strong cash balance.

The company said it has reduced its cost structure with what will be the lowest unit cost of major carriers, sees a 2007 debt reduction from $17 Billion down to $7.5 Billion, sees liquidity at $2.6 Billion in unrestricted cash, and sees a Blackstone estimated consolidated equity value of $9.4 Billion to $12 Billion upon exiting Chapter 11.

Now the main question holders need to know: What will happen to the common stock in the exit of Chapter 11?  Also they are going to resist takeovers maybe no matter what, or at least that is their indication.  The word STANDALONE appears 6-times in their press release today.

Jon C. Ogg
January 30, 2007