US Airways 2005 Annual Report Download - page 192

Table of Contents
America West Airlines, Inc.
Notes to Consolidated Financial Statements — (Continued)
accrued interest on, and all other amounts due under the Airbus $161 million loan have been paid in full and US Airways and AWA comply with the
aircraft delivery schedule.
(e) In August 1995, AWA issued $75 million principal amount of 103/4% senior unsecured notes due 2005, of which $40 million remained outstanding at
December 31, 2004. Interest on the 103/4% senior unsecured notes was payable semi-annually in arrears on March 1 and September 1 of each year. On
December 27, 2004, AWA called for the redemption on January 26, 2005 of all of the senior unsecured notes at a redemption price of 100% of the
principal amount thereof plus accrued and unpaid interest through the redemption date. In addition, AWA irrevocably deposited the $31 million raised
through the maintenance facility and flight training center financing, as discussed in note (c) above, together with an additional $11 million from its
operating cash flow, with the trustee for the senior unsecured notes. The senior notes were subsequently redeemed on January 26, 2005.
(f) In January 2002, in connection with the closing of the original AWA ATSB loan and the related transactions, America West Holdings issued
$105 million of 7.5% convertible senior notes due 2009, of which approximately $112 million remained outstanding at December 31, 2005 (including
$22 million of interest paid through December 31, 2004 as a deemed loan added to the initial principal thereof). Beginning January 18, 2005, these
notes are convertible into shares of common stock of US Airways Group, at the option of the holders, at an initial conversion price of $29.09 per share
or a conversion ratio of approximately 34.376 shares per $1,000 principal amount of such notes, subject to standard anti-dilution adjustments. Interest
on the 7.5% convertible senior notes is payable semiannually in arrears on June 1 and December 1 of each year. At America West Holdings' option, the
first six interest payments were payable in the form of a deemed loan added to the principal amount of these notes. The 7.5% convertible senior notes
will mature on January 18, 2009 unless earlier converted or redeemed. The payment of principal, premium and interest on the 7.5% convertible senior
notes is fully and unconditionally guaranteed by AWA and US Airways Group. For financial reporting purposes, America West Holdings recorded the
convertible senior notes at their fair market value on the date of issuance. The balance at December 31, 2005 is net of an unamortized discount of
$18 million.
(g) In July and August of 2003, AWA completed a private placement of approximately $87 million issue price of 7.25% Senior Exchangeable Notes due
2023. The notes bore cash interest at a rate of 2.49% per year, and were redeemable or exchangeable under certain conditions. Completion of the
merger between US Airways Group and America West Holdings on September 27, 2005 constituted a "change of control" under these notes and
required AWA to make an offer to holders to purchase those notes within 30 business days after the effective time of the merger at a purchase price of
$343.61 per $1,000 principal amount at maturity. Under the terms of the notes and the related Guarantee and Exchange Agreement, dated as of July 30,
2003, between America West Holdings and U.S. Bank National Association, as Trustee, as supplemented by the Guarantee and Exchange Agreement
Supplement No. 1 among America West Holdings, US Airways Group and the Trustee, dated as of September 27, 2005, AWA's obligation to purchase
the notes was satisfied at US Airways Group's election by delivery of shares of US Airways Group common stock having a "fair market value" of not
less than $343.61 per $1,000 principal amount at maturity. For this purpose, "fair market value" means 95% of the market price of US Airways Group
common stock calculated as the average closing prices over the five business days ending on and including the third business day before the purchase
date.
On October 24, 2005, US Airways Group issued a total of 4,156,411 shares of its common stock in exchange for approximately $250 million in
principal amount at maturity of AWA's Senior Exchangeable Notes due 2023, which notes were fully and unconditionally guaranteed by US Airways
Group. The shares were exchanged at a rate of 16 shares of US Airways Group common stock per $1,000 principal amount at maturity, in full
satisfaction of the purchase price of the notes. The 186