Airtran 2007 Annual Report Download - page 62

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7% Convertible Notes:
In May 2003, we completed a private placement of $125 million in convertible notes due in 2023. The proceeds were used to
improve our overall liquidity by providing working capital and for general corporate purposes. The notes bear interest at 7
percent payable semi-annually on January 1 and July 1. The notes are unconditionally guaranteed by Airways and rank
equally with all unsecured obligations of Airways. The unsecured notes and the note guarantee are junior to any secured
obligations of Holdings or Airways to the extent of the collateral pledged and are also effectively subordinated to all
liabilities of our subsidiaries (other than Airways).
The notes are convertible into shares of our common stock at a conversion rate of 89.9281 shares per $1,000 in principal
amount of the notes which equals an initial conversion price of approximately $11.12 per share. This conversion rate is
subject to adjustment in certain circumstances. We may redeem the notes, in whole or in part, for cash, beginning on July 5,
2010 at a redemption price equal to the principal amount of the notes plus any accrued and unpaid interest.
The holders of the notes may require us to repurchase the notes on July 1, 2010, 2013 and 2018 at a repurchase price of 100
percent of principal amounts plus any accrued and unpaid interest. We may, at our option, elect to pay the repurchase price in
cash, in shares of our common stock or in any combination of the two. If we elect to pay the repurchase price, in whole or in
part, in shares of our common stock, the number of shares to be delivered in exchange for the portion of the repurchase price
to be paid in our common stock will be equal to that portion of the repurchase price divided by 97.5% of the closing sale
price of our common stock for the five trading days ending on the third business day prior to the applicable repurchase date
(appropriately adjusted to take into account the occurrence of certain events that would result in an adjustment of the
conversion rate with respect to our common stock). Upon any such repurchase, it is our policy to pay the repurchase price in
cash.
Aircraft Notes Payable
Principal and interest payments on the enhanced equipment trust certificates (EETCs) are due semiannually through April
2017. As of December 31, 2007, 10 B717 aircraft were pledged as collateral.
Floating Rate Aircraft Pre-delivery Deposit Financing
As of December 31, 2007, we have outstanding three separate facilities (each a “PDP facility”) for purposes of financing our
obligations to make pre-delivery payments with respect to B737 aircraft on order with the aircraft manufacturer.
The PDP facilities entitle us to draw amounts to fund a portion of our obligations to make pre-delivery payments for each
aircraft. Drawings under a PDP facility bear interest at a floating interest rate above the one-month U.S. dollar LIBOR. Each
loan is secured by certain rights under our B737 aircraft purchase agreement with the aircraft manufacturer. The amount
outstanding under each PDP loan is paid off at the time the respective aircraft is delivered. As of December 31, 2007, $48
million was available to borrow, and $76.5 million has been borrowed to fund a portion of our pre-delivery payment
obligations for 28 B737 aircraft on order.
Letters of Credit
As of December 31, 2007, $12.2 million of restricted cash on the accompanying consolidated balance sheet serves to
collateralize outstanding letters of credit, primarily for airport facilities and insurance.
Line of Credit
In January 2008, one of the counterparties to our derivative financial arrangements agreed to provide an unsecured line of
credit of up to $15 million to fund any of our future collateral obligations arising from certain derivative financial instrument
arrangements. The line of credit commitment expires July 2008.