Delta Airlines 2005 Annual Report Download - page 94

Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
12-month period ending thereafter. If our cash on hand exceeds the minimum cash on hand that we are required to
maintain pursuant to the Liquidity Covenant, then the EBITDAR level that we are required to achieve is effectively
reduced by the amount of such excess cash, up to a maximum reduction of $250 million from the required EBITDAR
level.
The DIP Credit Facility contains events of default customary for debtor-in-possession financings, including cross-defaults to the
Amex Post-Petition Facility and certain change of control events. The DIP Credit Facility also includes events of default specific to
our business, including if all or substantially all of our flight and other operations are suspended for longer than two days, other than in
connection with a general suspension of all U.S. flights, or if certain routes and, subject to certain materiality thresholds, other routes,
and slots and gates are revoked, terminated or cancelled. Upon the occurrence of an event of default, the outstanding obligations under
the DIP Credit Facility may be accelerated and become due and payable immediately.
On March 27, 2006, we executed an amended and restated credit agreement (the "Amended and Restated DIP Credit Facility")
with a syndicate of lenders arranged by GECC and Morgan Stanley that replaced the DIP Credit Facility in its entirety. The aggregate
amounts available to be borrowed are not changed from the DIP Credit Facility by the Amended and Restated DIP Credit Facility.
However, under the Amended and Restated DIP Credit Facility, the interest rates on borrowings have been reduced: the TLA bears
interest, at our option, at LIBOR plus 2.75% or an index rate plus 2.00%; the TLB bears interest, at our option, at LIBOR plus 4.75%
or an index rate plus 4.00%; and the TLC bears interest, at our option, at LIBOR plus 7.50% or an index rate plus 6.75%. The
Amended and Restated DIP Credit Facility is otherwise substantially the same as the DIP Credit Facility, including financial
covenants, collateral, guarantees, and events of default, and it allows the execution of amendments to certain other credit facilities and
the Reimbursement Agreement described below.
Financing Agreement with Amex
On September 16, 2005, we entered into an agreement (the "Modification Agreement") with Amex and American Express Bank,
F.S.B. pursuant to which we modified certain existing agreements with Amex, including two agreements ("the Amex Pre-Petition
Facility") under which we had borrowed $500 million from Amex. The Amex Pre-Petition Facility consisted of substantially identical
supplements to the two existing agreements under which Amex purchases SkyMiles from us, the Membership Rewards Agreement
and the Co-Branded Credit Card Program Agreement (collectively, the "SkyMiles Agreements"). The Bankruptcy Court approved our
entering into the Modification Agreement and our assuming the SkyMiles Agreements. Amex has the right, in certain circumstances,
to impose a significant holdback on our receivables, including for tickets purchased using an American Express credit card but not yet
used for travel.
As required by the Modification Agreement, on September 16, 2005, we used a portion of the proceeds of our initial borrowing
under the DIP Credit Facility to repay the outstanding principal amount of $500 million, together with interest thereon, that we had
previously borrowed from Amex under the Amex Pre-Petition Facility. Simultaneously, we borrowed $350 million from Amex
pursuant to the terms of the Amex Pre-Petition Facility as modified by the Modification Agreement (the "Amex Post-Petition
Facility"). The amount borrowed under the Amex Post-Petition Facility will be credited, in equal monthly installments, towards
Amex's actual purchases of SkyMiles during the 17-month period commencing in July 2006. Any unused prepayment credit will
carryover to the next succeeding month with a final repayment date for any then outstanding advances no later than November 30,
2007. Prior to March 27, 2006, the outstanding advances bore a fee, equivalent to interest, at a rate of LIBOR plus a margin of
10.25%. As of the date of effectiveness of the Amended and Restated DIP Credit Facility, to which Amex consented, the fee on
outstanding advances decreased to a rate of LIBOR plus a margin of 8.75%.
On October 7, 2005, Amex consented to an amendment to the DIP Credit Facility in return for a prepayment of $50 million under
the Amex Post-Petition Facility. The prepayment will be credited in inverse order of monthly installments during the 17-month period
commencing in July 2006. F-32