US Airways 2005 Annual Report Download - page 132

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
margin. Both facilities contain customary events of default, including payment defaults, cross-defaults, breach of covenants, bankruptcy and insolvency
defaults and judgment defaults.
(c) On December 27, 2004, AWA raised additional capital by financing its Phoenix maintenance facility and flight training center. The flight training
center was previously unencumbered, and the maintenance facility became unencumbered earlier in 2004 when AWA refinanced its term loan. Using
its leasehold interest in these two facilities as collateral, AWA, through a wholly owned subsidiary named FTCHP LLC, raised $31 million through the
issuance of senior secured discount notes. The notes were issued by FTCHP at a discount pursuant to the terms of a senior secured term loan agreement
among the Company, FTCHP, Heritage Bank SSB, as administrative agent, Citibank, N.A., as the initial lender, and the other lenders from time to time
party thereto. Citibank, N.A. subsequently assigned all of its interests in the notes to third party lenders.
AWA has fully and unconditionally guaranteed the payment and performance of FTCHP's obligations under the notes and the loan agreement. The
notes require aggregate principal payments of $36 million with principal payments of $2 million due on each of the first two anniversary dates and the
remaining principal amount due on the fifth anniversary date. The notes may be prepaid in full at any time (subject to customary LIBOR breakage
costs) and in partial amounts of $2 million on the third and fourth anniversary dates. The unpaid principal amount of the notes bears interest based on
LIBOR plus a margin subject to adjustment based on a loan to collateral value ratio.
The loan agreement contains customary covenants applicable to loans of this type, including obligations relating to the preservation of the collateral and
restrictions on the activities of FTCHP. In addition, the loan agreement contains events of default, including payment defaults, cross-defaults to other
debt of FTCHP, if any, breach of covenants, bankruptcy and insolvency defaults and judgment defaults.
In connection with this financing, AWA sold all of its leasehold interests in the maintenance facility and flight training center to FTCHP and entered
into subleases for the facilities with FTCHP at lease rates expected to approximate the interest payments due under the notes. In addition, AWA agreed
to make future capital contributions to FTCHP in amounts sufficient to cover principal payments and other amounts owing pursuant to the notes and the
loan agreement.
The proceeds from this financing, together with $11 million from operating cash flow, were irrevocably deposited with the trustee for AWA's
103/4% senior unsecured notes due 2005, and the notes were subsequently redeemed on January 26, 2005.
(d) On September 27, 2005, US Airways and AWA entered into two loan agreements with Airbus Financial Services ("AFS"), an affiliate of Airbus, with
commitments in initial aggregate amounts of up to $161 million and up to $89 million. The Airbus loans bear interest at a rate of LIBOR plus a margin,
subject to adjustment during the term of the loans under certain conditions, and have been recorded as an obligation of US Airways Group. Amounts
drawn upon the Airbus loans are drawn first upon the Airbus $161 million loan until it has been drawn in its full amount, in which event the remaining
portion of the $250 million total commitment is drawn upon the Airbus $89 million loan.
On September 27, 2005, all of the Airbus $161 million loan and $14 million of the Airbus $89 million loan were drawn and are available for use for
general corporate purposes. At December 31, 2005, a total of $186 million was drawn under the Airbus loans. The remaining portion of the Airbus
loans is payable in multiple draws upon the occurrence of certain conditions, including the taking of delivery of certain aircraft, on the due dates for
certain amounts owing to AFS or its affiliates to refinance such amounts, after payment of certain invoices for goods and services provided by AFS or
its affiliates, or upon receipt by AFS of certain amounts payable in respect of existing aircraft financing transactions. The full amount of the Airbus
loans is expected to be available by the end of 2006. 126