JPMorgan, Goldman Sachs, Merrill Lynch, Lehman Brothers, UBS and Barclays Capital have committed $2.5 billion in exit financing for Delta Air Lines. The deal comprises a $1 billion first-lien revolver, a $500 million "A" term loan and a $1 billion second-lien "B" term loan. The company plans to emerge from Chapter 11 in Spring 2007. Pricing could not be determined. Last Wednesday, US Airways withdrew its offer to acquire the bankrupt airline after it was ultimately rejected by Delta's creditors.
The bankrupt airline initially received about $2.1 billion of debtor-in-possession financing from GE Commercial Finance and American Express in September 2005. That deal included a $600 million term loan "A" priced at LIBOR plus 5%, a $600 million term loan "B" priced at LIBOR plus 7% and a $500 million term loan "C" priced at LIBOR plus 9% (LMW, 9/16/2005). The company cut 175 basis points off tranches "A" and "B" and 150 basis points off tranche "C" in March (3/17).
According to a Standard & Poor's report, Delta was able to persuade a majority of its bankruptcy credits' committee that its plan to emerge as an independent company carried less risk than US Airways' proposal. In November, Citigroup committed $7.2 billion in financing for US Airways' proposed merger with Delta, valued at approximately $8 billion (CIN, 11/17). On Jan. 10, US Airways increased its bid for Delta, providing creditors with value between $12.7 billion to $15.4 billion in cash and stock. The bankrupt airline continually rejected the hostile takeover offers, commenting it would emerge on a stand-alone basis. Delta's management has stated it will not exclude the possibility of entertaining other merger proposals after it emerges from bankruptcy.
Delta filed for reorganization under Chapter 11 bankruptcy on Sept. 14, 2005. Based in Atlanta, Delta is the fourth largest airline in the world by revenue, behind Air France-KML Cargo, American Airlines and United Airlines. Calls to Edward Bastian, cfo, were not returned.