Delta Air Lines Obtains Commitment For $500 M Financing Transaction
DOW JONES NEWSWIRES
November 1, 2004 9:19 a.m.
ATLANTA -- Delta Air Lines Inc. (DAL) struck a deal with General Electric Co's (GE) GE Commercial Finance for $500 million in financing, amid a push to avoid bankruptcy.
In a press release Monday, the carrier said both portions of the loan, composed of $300 million in a senior secured revolving credit line and $200 million in a senior secured loan, will be subject to certain conditions.
As reported, Delta already has a commitment of up to $600 million in new financing from a unit of American Express Co. (AXP) and an agreement to defer $135 million of its debt for two years, provided the company meets all of its cost-cutting targets.
WASHINGTON (Dow Jones)--Delta Air Lines Inc. (DAL) said Monday that its newly obtained financing from GE Commercial Finance contains a condition for the company to have about $5 billion of annual savings by 2006.
The airline said in a document filed with the Securities and Exchange Commission that the new financing requires that its financial chief certify that there are anticipated annual benefits sufficient for it and its units to achieve financial viability through an out-of-court restructuring.
This includes a reduction of costs and other benefits of at least $2.7 billion annually by 2006, in addition to the $2.3 billion of annual benefits expected to be achieved by the end of 2004 through previously implemented profit improvement initiatives.
As reported earlier, Delta entered into a commitment letter with GE Commercial Finance to provide $500 million of financing.
The company said that $300 million of the financing will be in the form of a senior secured revolving credit facility and $200 million of the amount will be in the form of a senior secured term loan.
Delta's chief financial officer is Michael Palumbo.
-By Chad Clinton, Dow Jones Newswires; 202-862-1349; chad.clinton@dowjones.com
Delta said the revolving facility, which matures three years from the closing date, will be collateralized by a portion of accounts receivable. Unencumbered assets will collateralize the term loan.
Up to $100 million of the financing will come from a previous commitment with Amercian Express Co.
As of Sept. 30, Delta had unrestricted cash and cash equivalents of $1.45 billion, debt and capital leases of $12.77 billion, and total assets of $23.53 billion.
The Wall Street Journal recently reported that Delta considered its financial position "precarious," but that the company said that it was making progress in its efforts to avoid bankruptcy.
-Rob Curran; Dow Jones Newswires; 201-938-5400; AskNewswires@dowjones.com