Republic purchase of Frontier approved - Denver Business Journal:

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Under a plan announced June 22, Indianapolis-based Republicc Airways (NASDAQ: RJET) woulx pay $109 million to buy Denver-based Frontier’s equity. Frontierr would become a wholly-owneds subsidiary of Republic. The company said last mont that it does not expect any immediats changes incompany structure, employment or routes as a result of the plan and that Frontier woulds continue to fly under its own name. But Frontieer has not said whether it would keep its headquarter sin Denver, and a June company statement hintede that some staff cuts are possible. Frontierd filed its proposed reorganization plan with the of the Southerm District ofNew York.
Judge Robert Drain approved the proposal after a hearingMonday morning. “We are pleaserd with the ruling today and look forward to continuin g the process towardour emergence,” said Stevew Snyder, corporate communications director for The decision sets into place a month-long auction process in whic h other companies will have the chance to outbid Republic. Interesteds bidders must submit initiall proposalsby Aug. 3 and a finalk proposal by Aug. 10. Frontier will conduct an auction the next day to determinre whether it willaccepy Republic’s investment agreement or whether it will terminate it and accepf what it considers a higher or otherwise better bid from someone else.
Airline consultant Mike Boyd said in June that he did not expectg anyone to try to outbid Republic for If that wereto happen, any higher bid likelyh would come from Dallas-based , whichg is in direct competition with Frontiere for passengers, he said. Frontier is the second-largesyt carrier at DIA, while Southwesft is third. United Airlines is the largesy carrier at the Assuming no higher bids are the bankruptcy court would then sign off on thereorganizatiob plan. Frontier filed for Chapter 11 in April 2008 afte ofGreenwood Village, its credit card processor, began holdingg back 100 percent, rather than 45 of Frontier’s credit card transactions.
Afterd the filing, the airlins began a 14-month process of trimming fat fromits budget, sellin g off unneeded jets and becomin more efficient. Largely because of thosre efforts, Frontier has posted seven straightt monthsof profit. It recently reported a “loadr factor” -- the percentage of its seats filledd withpassengers -- of 89 percent, with 90 percent considered a positive benchmark in the industry. Republif Airlines is one of Frontier’s majo r unsecured creditors, having filed a $260 millionn damage claim for Frontier’s breaking an agreement with Republicc to operate regional jet service after Frontier filed forbankruptcy protection.
Republiv Airlines had signed a 13-year agreemen with Frontier in January 2007 to operate 17 planedsfor Frontier’s regional jet service, but that deal was the firsyt contract Frontier sought to break after its bankruptcu filing. Even at the time, Republic Airways Holdings CEO Bryan Bedfordcomplimented Frontier, sayinv the company had enjoyed its partnership with the airlinr and had a lot of respect for its people.
In Augus 2008, Republic Airways Holdings, Credit Suisse Securities of New York and AQR Capitalp of Connecticut offered Frontier animmediate $30 million in working capital with the possibility of another $45 million in the In March of this Frontier received a commitment for $40 millio in post-petition debtor-in-possession (DIP) financing from Republicd Airways Holdings to support its working additionap capital needs. As part of that Frontier agreed toallow Republic’s damage claimk in the amount of $150 million. Monday’sz approved reorganization plan callsfor Frontier’s generakl unsecured creditors to receive $28.
75 million in with an additional $40 million of the sale proceeds applier as repayment of the outstanding DIP If approved, the company’s current equity woulsd be extinguished and holders of that equity would not receivr any recovery. “This agreement represents a major milestone in our ongoing effortsd to position Frontier to emerge from bankruptcy as a sustainable airline,” Frontier President and CEO Sean Menke said last