Delta Airlines 2004 Annual Report Download - page 86

Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Financing Agreement with GE
During the December 2004 quarter, we entered into the GE Commercial Finance Facility to borrow up to $630 million from a syndicate of financial
institutions for which General Electric Capital Corporation acts as agent ("Agent"). As discussed below, the GE Commercial Finance Facility consists of a
$330 million senior secured term loan ("Term Loan") and a $300 million senior secured revolving credit facility ("Revolver").
The total committed amount of the Revolver is $300 million, subject to reserves set by the Agent from time to time (currently $50 million). Up to
$150 million of the Revolver is available for the issuance of letters of credit. On December 1, 2004, we borrowed $250 million under the Revolver, of which
$231 million was outstanding at December 31, 2004. Availability under the Revolver is subject to a Revolver borrowing base, defined as the sum of (1) up to
80% of the book value of eligible billed accounts receivable, (2) up to 50% of the book value of eligible unbilled accounts receivable, and (3) up to the lesser
of 50% of the book value of eligible refundable tickets and $30 million, in each case less reserves established from time to time by the Agent. If the
outstanding Revolver at any time exceeds the Revolver borrowing base, we must immediately repay an amount equal to the excess. The Revolver matures on
December 1, 2007. Revolver loans bear interest at LIBOR or an index rate, at our option, plus a margin of 4.00% over LIBOR and 3.25% over the index rate.
The unused portion of the Revolver is subject to a fee of 0.50% or 0.75% per annum, depending upon the amount used.
The total amount of our Term Loan is $330 million, which we borrowed in full on December 1, 2004. The Term Loan is subject to a Term Loan
borrowing base, defined as the sum of (1) the lesser of 50% of the fair market value of eligible real estate and $100 million, (2) the lesser of 50% of the net
orderly liquidation value ("NOLV") of eligible aircraft and $215 million, (3) the lesser of 50% of the NOLV of eligible flight simulators and $25 million,
(4) the lesser of 25% of the NOLV of eligible spare parts and $7 million, (5) the lesser of 25% of the NOLV of eligible ground service equipment and
$25 million, (6) the lesser of 25% of the NOLV of certain other eligible equipment and $25 million, and (7) the amount of cash held in cash collateral
accounts pledged to the Term Loan lenders, in each case less reserves established from time to time by the Agent. If the outstanding Term Loan at any time
exceeds the Term Loan borrowing base, we must immediately repay an amount equal to the excess. The Term Loan is repayable in 12 equal monthly
installments commencing on January 1, 2007, with the final installment due December 1, 2007. The Term Loan bears interest at LIBOR or an index rate, at
our option, plus a margin of 6.00% over LIBOR and 5.25% over the index rate, subject to a LIBOR floor of 3%.
Our obligations under the GE Commercial Finance Facility are guaranteed by substantially all of our domestic subsidiaries (the "Guarantors"), other than
ASA Holdings, Inc. ("ASA Holdings") and Comair Holdings LLC ("Comair Holdings") and their respective subsidiaries. We will be required to make certain
mandatory repayments of the Term Loan and the Revolver (or reduce the Revolver availability) in the event we sell certain assets (including ASA Holdings
and subsidiaries and Comair Holdings and subsidiaries), subject to certain exceptions. We may not voluntarily repay the Revolver other than in connection
with an equal permanent reduction in its availability.
The Revolver is secured by (1) a first priority lien on all of our and the Guarantors' accounts receivable, excluding certain accounts receivable subject to a
first priority lien securing the Amex Facilities (as defined below), and (2) a second priority lien on all assets securing the Term Loan. Subject to certain
exceptions, the Term Loan is secured by a first priority lien on substantially all of our and the Guarantors' other remaining unencumbered assets. The Term
Loan is also secured by a second priority lien on all assets securing the Revolver. The Revolver and the Term Loan are also secured by a junior lien on assets
securing the Amex Facilities (as defined below). Our obligations and the obligations of the Guarantors under any intercompany loan are expressly
subordinated to our obligations and the obligations of our Guarantors under the Revolver and the Term Loan.
The GE Commercial Finance Facility includes affirmative, negative and financial covenants that impose substantial restrictions on our financial and
business operations, including our ability to, among other things, F-29