Airtran 2008 Annual Report Download - page 94

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).
5.5% Convertible Senior Notes
On April 30, 2008, we completed a public offering of $74.8 million in convertible senior notes due in 2015. The
proceeds were used to improve our overall liquidity by providing working capital and for general corporate
purposes. Such notes bear interest at 5.5 percent payable semi-annually, in arrears, on April 15 and October 15.
The 5.5% notes are senior unsecured obligations of Holdings and rank equally with all existing and future
senior unsecured obligations of Holdings. The 5.5% notes are effectively subordinated to all liabilities of our
subsidiaries.
The 5.5% notes are convertible into shares of our common stock at a conversion rate of 260.4167 shares per
$1,000 in principal amount of such notes that equals an initial conversion price of approximately $3.84 per
share. This conversion rate is subject to adjustment in certain circumstances. Holders may convert their
5.5% notes into shares of our common stock at their option on any day until, and including, the business day
immediately preceding the maturity date of such notes. The 5.5% notes are not redeemable at our option prior to
maturity. The holders of the 5.5% notes may require us to repurchase such notes, in whole or in part, for cash
upon the occurrence of a fundamental change, as defined in the governing supplemental indenture, at a
repurchase price of 100 percent of principal amounts plus any accrued and unpaid interest.
We placed approximately $12.2 million of the proceeds of the offering in an escrow account with the trustee.
Funds in the escrow account are invested in government securities and will be used to make the first six
scheduled semi-annual interest payments on the 5.5% notes, and these payments are secured by a pledge of the
assets in escrow. Holders who convert their notes prior to April 15, 2011 will receive, in addition to a number of
shares of our common stock calculated based on the conversion rate, the cash proceeds from the sale by the
escrow agent of that portion of government securities in the escrow account that relate to the applicable holder’s
5.5% notes being converted.
During the fourth quarter of 2008, $5.3 million of such notes were converted to 1.4 million shares of our
common stock and $0.7 million was paid from the escrow account to the former note holders.
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