News 11 Oct. 2005

Curtis Represents U.S. Government In Sale Of US Airways Debt And Warrants

On October 3, 2005, the Federal Government, represented by Curtis and acting through the Bureau of Public Debt, an arm of the Treasury Department, sold back to US Airways Group, Inc. warrants to purchase 7.7 million shares of the company's common stock. The warrants were exercisable at $7.27 per share at any time before January 2012. The negotiated sale price of $115.8 million was the midpoint between the intrinsic value of the warrants based on the stock's October 1st closing price of $21 per share and the warrants' option valued based on the Black-Scholes valuation methodology. The warrants were originally issued to the federal Air Transportation Stabilization Board (ATSB) in connection with its guarantee of a $429 million senior unsecured loan to America West Airlines in January 2001 following 9/11. America West merged with US Airways on September 27, 2005.

Concluding on October 13, 2004, the Federal Government, again represented by Curtis, sold to a syndicate of investment funds its remaining $265 million position in the America West loan, as well as its $525 million position in a senior secured loan to US Airways originally guaranteed by the ATSB in March 2002. The US Airways loan, which was sold at par, had been reinstated as a part of US Airways' emergence from Chapter 11 and merger with America West. The America West loan, which sold at 101% of par, had been restructured as a second-lien loan in exchange for the ATSB's consent to the merger. Lazard LLC acted as placement agent in the sale of the loans.

The ATSB was formed by an Act of Congress after 9/11 to provide liquidity to the domestic airline industry. The representation was handled by Daniel Lenihan, Jeff Ostrager, Kathryn Alisbah, Evan Borenstein, Rekha Rangam, and Jerry Nunez.