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

By Douglas A. McIntyre Published Jan 30, 8:38AM EST

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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

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.