Frontier Airlines 2008 Annual Report Download - page 73

In October 2008, the Company entered into a loan agreement with Mokulele under which we are providing up to $8,000,
with an interest rate of 10%, which is payable monthly. The loan agreement was provided to Mokulele in the form of a revolving line
of credit, which can be converted at the Company’s option, to as much as 45% of the common stock of Mokulele. The loan is
collateralized by all of Mokulele’s unencumbered assets and a pledge of the equity holdings of Mokulele’s majority shareholders. The
loan matures in October 2010. Mokulele is currently in default of its loan and code-share agreement. We are negotiating with
Mokulele the terms of a possible recapitalization of Mokulele, but there can be no assurance that Mokulele will be recapitalized. As a
part of these negotiations, we are contemplating converting $3,000 of our loan and injecting $3,000 of cash in exchange for 50% of
Mokulele's common stock. Even if this recapitalization is completed, Mokulele could require additional funding, part or all of which
may come from us. If the business environment does not improve for Mokulele, our financial condition, results of operations and
liquidity could be adversely affected.
Due to the uncertainty of whether or not the Company would receive value equal to the carrying value of the Mokulele note,
the Company recorded a valuation allowance of $1,500 in December 2008. The valuation allowance was determined based estimated
fair value of the collateral, if the Company exercised its rights under the loan agreement.
-41-
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 16, 2009 Powered by Morningstar® Document Research℠