Syndication of the exit financing for UAL Corp., the holding corporation for United Airlines, launched last Monday. The loan comprises a six-year, $300 million revolving credit facility and a six-year term loan that has the potential to be worth as much as $2.7 billion. Both tranches are priced at LIBOR plus 4 1/2%. The financing is being led by JPMorgan and Citigroup. GE Capital is the syndication agent on the deal, which is scheduled to close at the end of the month.
Standard & Poor's placed a B+ rating on the both the revolver and the term loan. Additionally, S&P assigned a recovery rating of 1 to the facility. S&P anticipates assigning a corporate rating of B to both United and UAL following the company's emergence from bankruptcy. Moody's Investors Service placed a rating of B1 on UAL's exit loan.
United entered Chapter 11 bankruptcy protection in December 2002. A bankruptcy hearing is scheduled for this Wednesday and if approval is granted, United plans to emerge from bankruptcy around Feb. 1. As the second largest U.S. carrier behind American Airlines, United has struggled with its business since 2001 as a result of high fuel prices and cheaper ticket prices from non-legacy airlines. Calls to bankers at Citigroup and GE Capital were not returned. A spokesman at UAL declined comment, as did a spokesman at JPMorgan.