Animal Tails Live To Fly Another Day Under New Majority
Shareholder
A struggling airline has won something of a reprieve. Frontier
Airlines announced Monday it has received a $75 million commitment
in post-petition debtor-in-possession (DIP) financing from Perseus
LLC. Perseus also agreed to serve as equity sponsor for Frontier's
plan of reorganization, allowing Perseus to purchase 79.9% of the
equity in the reorganized company for $100 million.
"Today's announcement is a major boost to Frontier and builds
momentum toward its emergence from bankruptcy as a viable
enterprise. The $75 million commitment in DIP financing from
Perseus is a significant vote of confidence in the employees of
Frontier, our product and business plan," said Sean Menke, Frontier
President and Chief Executive Officer. "Despite the current
challenges facing the airline industry, these transactions help
point the way towards Frontier's emergence from bankruptcy as a
competitive, sustainable airline."
"We are enthusiastic about the opportunity to invest in the
future of Frontier," said Brian Leitch, Senior Managing Director of
Perseus. "We believe that Frontier has the highest-quality
affordable coach product in the domestic airline industry. We are
impressed by Frontier's excellent employees and friendly customer
service, as well as the numerous product characteristics that
distinguish Frontier from its competitors. Industry data supports
our conclusion that when given a choice, the majority of coach
travelers prefer Frontier over the competitive options. The airline
industry is in a state of transition and some degree of turmoil.
Although Frontier has been buffeted by recent fuel price increases
and certain other issues, we believe that Frontier has proven that
it deserves a chance to succeed in this challenging market, and we
are proud to help it do so."
Frontier filed a motion on Friday with the US Bankruptcy Court
for the Southern District of New York. Upon court approval, Perseus
will provide funding under the proposed DIP credit facility in two
installments to support the company's working capital needs. The
proposed DIP funding, coupled with Frontier's negotiations with
partners to improve liquidity, reduce expenses, and preserve cash,
is expected to provide sufficient working capital for the Company's
operations. The Company continues to work with its partners and
employees to obtain additional liquidity, reduce expenses and
enhance revenues.
"We are grateful that many of our key vendors and business
partners, as well as all of our employees, have stepped up and made
financial sacrifices to help provide Frontier with a lot of staying
power," Menke said. "Through a variety of transactions and business
initiatives, we have improved our liquidity over a very short
period of time. All of this support reaffirms the fundamental
business changes we have been making since the beginning of the
year. We continue to adjust capacity and realign our route network
to leverage our brand strengths and market awareness during a
period of severe industry turmoil."
As ANN reported, Frontier and its subsidiaries
filed for reorganization on April 10.