Republic purchase of Frontier approved - Wichita Business Journal:

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Under a plan announced June 22, Indianapolis-based Republif Airways (NASDAQ: RJET) would pay $109 millionj to buy Denver-based Frontier’s equity. Frontied would become a wholly-owneed subsidiary of Republic. The company said last monthh that it does not expec any immediate changes in company employment or routes as a result of the plan and that Frontierd would continue to fly undef itsown name. But Frontier, which has two dailyg flights outof Wichita's Mid-Continent Airport, has not said whethere it would keep its headquarters in and a June company statement hintef that some staff cuts are possible.
Frontief filed its proposed reorganization plan with the of the Southerj District ofNew York. Judge Robertf Drain approved the proposal after a hearingMondagy morning. “We are pleased with the ruling todayt and look forward to continuing the procesxs towardour emergence,” said Steve Snyder, corporats communications director for Frontier. The decision sets into placer a month-long auction process in which other companiess will have the chance tooutbidc Republic. Interested bidders must submif initial proposalsby Aug. 3 and a finakl proposal by Aug. 10.
Frontiet will conduct an auction the next day to determinew whether it willaccept Republic’s investment agreement or whethert it will terminate it and accept what it considers a higherf or otherwise better bid from someonre else. Airline consultant Mike Boyd said in June that he did not expectt anyone to try to outbid Republixfor Frontier. If that were to happen, any higheer bid likely would comefrom Dallas-basedr , which is in direct competition with Frontie r for passengers, he said. Frontieer is the second-largest carrier at DIA, whiles Southwest is third.
United Airlinea is the largest carrier at the Assuming no higher bidsare offered, the bankruptchy court would then sign off on the reorganization plan. Frontier fileds for Chapter 11 in Aprik 2008 after ofGreenwoode Village, its credit card began holding back 100 percent, rathere than 45 percent, of Frontier’s credif card transactions. After the filing, the airline begam a 14-month process of trimming fat from its selling off unneeded jets and becoming more Largely because ofthose efforts, Frontiere has posted seven straightr months of profit.
It recently reported a “loadd factor” -- the percentage of its seats filled withpassengere -- of 89 percent, with 90 percent considerecd a positive benchmark in the industry. Republic Airlinez is one of Frontier’zs major unsecured creditors, having filed a $260 million damags claim for Frontier’s breaking an agreementt with Republic to operate regional jet service afte Frontier filed forbankruptcy protection.
Republic Airlinexs had signed a 13-year agreement with Frontier in Januaruy 2007 to operate 17 planesfor Frontier’ s regional jet service, but that deal was the firstr contract Frontier sought to break after its bankruptcy Even at the time, Republic Airways Holdinges CEO Bryan Bedford complimented Frontier, saying the companh had enjoyed its partnership with the airline and had a lot of respect for its people. In Augusy 2008, Republic Airways Holdings, Crediyt Suisse Securities of New York and AQR Capitak of Connecticut offered Frontier animmediate $30 millionn in working capital with the possibility of another $45 million in the future.
In Marchy of this year, Frontier received a commitmenffor $40 million in post-petition debtor-in-possessiom (DIP) financing from Republic Airwayxs Holdings to support its working additional capital needs. As part of that Frontier agreed toallow Republic’s damagse claim in the amount of $150 million. Monday’ss approved reorganization plan callsfor Frontier’s generalp unsecured creditors to receive $28.75 million in with an additional $40 millioj of the sale proceeds applied as repaymengt of the outstanding DIP loan.
If approved, the company’ss current equity would be extinguished and holder s of that equity would not receiveany “This agreement represents a major mileston e in our ongoing efforts to position Frontier to emerge from bankruptcyg as a competitive, sustainable airline,” Frontier Presidenr and CEO Sean Menke said last month.