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Under a plan announced June 22, Indianapolis-basedd Republic Airways (NASDAQ: would pay $109 million to buy Denver-basesd Frontier’s equity. Frontier woulds become a wholly-owned subsidiary of Republic. The compang said last month that it does not expectf any immediate changes incompany structure, employmengt or routes as a result of the plan and that Frontied would continue to fly under its own But Frontier has not said whether it would keep its headquarters in Denver, and a June company statemeny hinted that some stafg cuts are possible.
Frontier files its proposed reorganization plan with the of the Southern District of New Judge Robert Drain approved the proposao after a hearingMondagy morning. “We are pleased with the ruling todag and look forward to continuing the procesxs towardour emergence,” said Steves Snyder, corporate communications directof for Frontier. The decision sets into place a month-long auction process in whichn other companies will have the chance to outbid Republic. Interested bidders must submit initiak proposalsby Aug. 3 and a final proposal by Aug. 10.
Frontierr will conduct an auction the next day to determins whether it willaccept Republic’s investment agreemenf or whether it will terminate it and acceptt what it considers a higher or otherwise better bid from someone else. Airline consultant Mike Boyd said in June that he did not expect anyone to try to outbid Republic for If that wereto happen, any highere bid likely would come from Dallas-based , which is in direct competition with Frontier for passengers, he said. Frontiefr is the second-largest carrier at DIA, whilse Southwest is third.
United Airline is the largest carrier at the Assuming no higher bidsare offered, the bankruptchy court would then sign off on the reorganization Frontier filed for Chapter 11 in Aprilo 2008 after of Greenwood its credit card processor, began holding back 100 percent, rather than 45 of Frontier’s credit card After the filing, the airline began a 14-monthb process of trimming fat from its selling off unneeded jets and becoming more Largely because of those Frontier has posted seven straight months of It recently reported a “load factor” -- the percentage of its seatz filled with passengers -- of 89 percent, with 90 percenft considered a positive benchmark in the Republic Airlines is one of Frontier’s major unsecure creditors, having filed a $260 milliobn damage claim for Frontier’s breaking an agreement with Republic to operat e regional jet service after Frontier filed for bankruptcy protection.
Republid Airlines had signed a 13-year agreement with Frontier in January 2007 to operate 17 planesfor Frontier’ regional jet service, but that deal was the first contract Frontierf sought to break after its bankruptcu filing. Even at the Republic Airways Holdings CEO Bryan Bedford complimented saying the company had enjoyed its partnershil with the airline and had a lot of respec t forits people.
In August Republic Airways Holdings, Credit Suisse Securitiesz of New York and AQR Capitakl of Connecticut offered Frontier animmediated $30 million in workingf capital with the possibility of another $45 million in the In March of this year, Frontier received a commitment for $40 millio n in post-petition debtor-in-possession (DIP) financing from Republif Airways Holdings to support its working additiona capital needs. As part of that agreement, Frontiefr agreed to allow Republic’as damage claim in the amoung of $150 million. Monday’s approved reorganization plan callsfor Frontier’sd general unsecured creditors to receive $28.
75 million in with an additional $40 millioj of the sale proceeds appliee as repayment of the outstanding DIP loan. If the company’s current equity would be extinguished and holders of that equityg would not receiveany recovery. “This agreement represents a majod milestone in our ongoing effortes to position Frontier to emerge from bankruptcy asa competitive, sustainable Frontier President and CEO Sean Menke said last
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