Investors holding trade claims in United Airlines are cashing out before the claims convert into equity, which could happen as early as next week. The price of the claims has fallen to 22.3 from 25.6 in the past week, according to a trader. "There has been a lot of chunky selling," he said.
UAL has said it plans to emerge from Chapter 11 in early February. Under UAL's plan of reorganization, it will issue up to 125 million shares of common stock at that time. The prospect of holding equity in the restructured UAL is not appealing to some investors, so they're selling.
Most of the shares will go to the company's former unsecured creditors, according to a company release. The stocks will trade on the NASDAQ Stock Market under the ticker symbol UAUA. UAL also announced in the release that it has received a positive response to the syndication of its $3 billion exit financing facility led by JPMorgan and Citigroup. Because of oversubscription, pricing was cut 75 basis points. The facility is now priced at LIBOR plus 3 3/4%. A UAL spokesperson could not be reached for comment.