Delta Airlines 2003 Annual Report Download - page 101

Table of Contents
liabilities and the related remaining proceeds, which are held in trust, are reflected as restricted investments in other assets on our Consolidated Balance
Sheets.
Letter Of Credit Enhanced Municipal Bonds
At December 31, 2003, there were outstanding $397 million aggregate principal amount of tax-exempt municipal bonds (Bonds) enhanced by letters of credit,
including:
• $295 million principal amount of bonds issued by the Development Authority of Clayton County (Clayton Authority) to refinance the construction
cost of certain facilities leased to us at Hartsfield-Jackson Atlanta International Airport. We pay debt service on these bonds pursuant to loan
agreements between us and the Clayton Authority; and
• $102 million principal amount of bonds issued by other municipalities to refinance the construction cost of certain facilities leased to us at
Cincinnati/Northern Kentucky International Airport, Salt Lake City International Airport and Tampa International Airport. We pay debt service on
these bonds pursuant to long-term lease agreements (see Note 7).
The Bonds (1) have scheduled maturities between 2029 and 2035; (2) currently bear interest at a variable rate that is determined weekly; and (3) may be
tendered for purchase by their holders on seven days' notice. Tendered Bonds are remarketed at prevailing interest rates.
Principal and interest on the Bonds are currently paid through drawings on irrevocable, direct-pay letters of credit totaling $404 million issued by GECC. In
addition, the purchase price of tendered Bonds that cannot be remarketed are paid by drawings on these letters of credit. The GECC letters of credit, which
replaced similar letters of credit issued by a third party, expire on May 20, 2008.
Pursuant to an agreement between us and GECC (Reimbursement Agreement), we are required to reimburse GECC for drawings on the letters of credit. Our
reimbursement obligation to GECC is secured by nine B-767-400 and three B-777-200 aircraft (LOC Aircraft Collateral) and 96 spare mainline engines
owned by us. This collateral also secures other obligations we have to GECC, as discussed in the table above.
If a drawing under a letter of credit is made to pay the purchase price of Bonds tendered for purchase and not remarketed, our resulting reimbursement
obligation to GECC will bear interest at a base rate or three-month LIBOR plus a margin. The principal amount of the reimbursement obligation will be
repaid quarterly through May 20, 2008.
GECC has the right to cause a mandatory tender for purchase of all Bonds and terminate the letters of credit if an event of default occurs or if a minimum
collateral value test (Collateral Value Test) is not satisfied on May 19, 2006. We will not satisfy the Collateral Value Test if (1) the appraised market value of
the LOC Aircraft Collateral on March 20, 2006 is less than two times the aggregate amount of the outstanding letters of credit plus any other amounts payable
by us under the Reimbursement Agreement (Aggregate Obligations) and (2) within 60 days
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