Delta Airlines 2004 Annual Report Download - page 84

Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
LIBOR plus a margin. The principal amount of any outstanding 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, in which case the principal amount of all reimbursement obligations (including
for any Bonds tendered and not remarketed) would be due and payable immediately. We will not satisfy the Collateral Value Test, as amended, if (1) the
aggregate amount of the outstanding letters of credit plus any other amounts payable by us under the Reimbursement Agreement ("Aggregate Obligations")
on March 20, 2006 is more than 60% of the appraised market value of the LOC Aircraft Collateral plus the fair market value of permitted investments held as
part of the collateral and (2) within 60 days thereafter, we have not either provided additional collateral to GECC in the form of cash or aircraft or caused a
reduction in the Aggregate Obligations such that the Collateral Value Test is satisfied.
Unless the GECC letters of credit are extended in a timely manner, we will be required to purchase the Bonds on May 15, 2008, five days prior to the
expiration of the letters of credit. In this circumstance, we could seek, but there is no assurance that we would be able (1) to sell the Bonds without credit
enhancement at then-prevailing fixed interest rates or (2) to replace the expiring letters of credit with new letters of credit from an alternate credit provider and
remarket the Bonds.
We may terminate the GECC letters of credit, and repay any outstanding obligations under the Reimbursement Agreement, at our election prior to
maturity, subject to certain prepayment fees if such action occurs before May 20, 2005.
8.00% Convertible Senior Notes Due 2023 ("8.00% Notes")
In June 2003, we issued $350 million principal amount of 8.00% Notes due 2023. Holders may convert their 8.00% Notes into shares of our common
stock at a conversion rate of 35.7143 shares of common stock per $1,000 principal amount of 8.00% Notes, subject to adjustment in certain circumstances,
which is equivalent to a conversion price of approximately $28.00 per share of common stock, if:
• during any calendar quarter after June 30, 2003, the last reported sale price of our common stock for at least 20 trading days during the
period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to
130% of the conversion price per share of our common stock;
• the trading price of the 8.00% Notes falls below a specified threshold;
• we call the 8.00% Notes for redemption; or
• specified corporate transactions occur.
We may redeem all or some of the 8.00% Notes for cash at any time after June 5, 2008, at a redemption price equal to the principal amount of the
8.00% Notes to be redeemed plus any accrued and unpaid interest.
Holders may require us to repurchase their 8.00% Notes for cash on June 3, 2008, 2013 and 2018, or in other specified circumstances involving the
exchange, conversion or acquisition of all or substantially all of our common stock, at a purchase price equal to the principal amount of the 8.00% Notes to be
purchased plus any accrued and unpaid interest. At December 31, 2004, 12.5 million shares of common stock were reserved for issuance for the conversion of
the 8.00% Notes.
27/8% Convertible Senior Notes due 2024 ("27/8% Notes")
In February 2004, we issued $325 million principal amount of 27/8% Notes due 2024. Holders may convert their 27/8% Notes into shares of our common
stock at a conversion rate of 73.6106 shares of common stock per F-27