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US Airways Increases Offer for Delta Air Lines

US Airways Group, last month announced that it has increased its offer to merge with Delta Air Lines, Inc. Under the revised proposal Delta’s unsecured creditors would receive $5.0 billion in cash and 89.5 million shares of US Airways stock.

When applying the same valuation methodology and assumptions as described in Delta’s Disclosure Statement, US Airways’ advisor Citigroup estimates this new proposal will provide between $12.7 and 15.4 billion in value to Delta’s unsecured creditors, which represents a significant premium over the $9.4 to 12.0 billion valuation that Delta places on its stand-alone plan.

Based on the closing price of US Airways stock as of Tuesday, Jan. 9, 2007, the new proposal has a current market value of approximately $10.2 billion.

The merger is expected to be accretive to US Airways’ earnings per share in the first full year after completion of the merger.

The increased offer is set to expire on Feb. 1, 2007, unless, of course, there is affirmative creditor support for commencement of due diligence, which would make the required filings under Hart-Scott-Rodino, as well as the postponement of Delta’s hearing on its Disclosure Statement scheduled for Feb. 7, 2007.

US Airways has committed financing from Citigroup and Morgan Stanley for the proposed transaction for $8.2 billion, representing $5.0 billion to fund the cash portion of the offer and $3.2 billion in refinancing existing obligations at both US Airways and Delta.

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