United Airlines 2009 Annual Report Download - page 119

Table of Contents
below) and 6% Senior Notes (as defined below) discussed below. The 4.5% Notes are callable, at UAL’s option, at any time at par, plus accrued and unpaid
interest, and can be redeemed with cash, shares of UAL common stock or a combination thereof, beginning in 2011, except that UAL may elect to pay the
redemption price in shares of UAL common stock only if the common stock has traded at no less than 125% of the conversion price for the 60 consecutive
trading days immediately prior to the redemption date. In addition, on each of June 30, 2011 and June 30, 2016, noteholders have the option to require UAL to
repurchase the 4.5% Notes. UAL may elect to pay the repurchase price in cash, shares of UAL common stock or a combination thereof. The 4.5% Notes are
guaranteed by United.
5% Senior Convertible Notes due 2021 (the “5% Notes”). The 5% Notes are unsecured and do not require any payment of principal prior to maturity.
Interest is payable semi-annually, in arrears. The 5% Notes may be converted, at the noteholders’ option, into shares of UAL common stock at any time at an
initial conversion price of $46.86 per share. Effective January 10, 2008, the conversion price was adjusted to $43.90 per share due to UAL’s January 23, 2008
special distribution to holders of UAL common stock. This conversion price is subject to adjustment for certain dilutive items and events. The 5% Notes are
callable, at UAL’s option, at any time at par, plus accrued and unpaid interest, and can be redeemed with cash, shares of UAL common stock or a combination
thereof, beginning in 2011. In the case of any such redemption, the Company may only redeem these notes with shares of common stock if UAL common stock
has traded at no less than 125% of the conversion price for the 60 consecutive trading days immediately prior to the redemption date. The noteholders have the
option to require UAL to repurchase the 5% Notes on February 1, 2011 and February 1, 2016. UAL may elect to pay the repurchase price in cash, shares of UAL
common stock or a combination thereof. The 5% Notes are guaranteed by United.
6% Senior Notes due 2031 (the “6% Senior Notes”). The 6% Senior Notes are unsecured and do not require any payment of principal prior to maturity.
Interest is payable semi-annually, in arrears. UAL may pay interest in cash, or, on or prior to December 31, 2011, UAL may pay interest by issuing UAL
common stock with a market value as of the close of business immediately preceding the relevant interest payment date equal to the amount of interest due or by
issuing additional 6% Senior Notes. The 6% Senior Notes are callable, at UAL’s option, at any time at par, plus accrued and unpaid interest, and can be
redeemed with cash, shares of UAL common stock or a combination thereof. Upon a change in control or other event as defined in the indenture governing the
6% Senior Notes, UAL has an obligation to redeem the 6% Senior Notes. In the case of such mandatory redemption, UAL may elect to redeem the notes in cash,
shares of UAL common stock or a combination thereof. UAL paid interest in-kind of approximately $33 million and $31 million on the 6% Senior Notes during
the years ended December 31, 2009 and 2008, respectively. The 6% Senior Notes are guaranteed by United.
Contingent Senior Unsecured Notes. In addition to the debt issued as noted above, UAL is obligated to issue to or for the benefit of the PBGC
8% Contingent Senior Notes (the “8% Notes”) with an aggregate $500 million principal amount in up to eight equal tranches of $62.5 million (with no more than
two tranches issued as a result of each issuance trigger event) upon the occurrence of certain financial triggering events. An issuance trigger event occurs when,
among other things, the Company’s EBITDAR exceeds $3.5 billion over the prior twelve months ending June 30 or December 31 of any applicable fiscal year,
beginning with the fiscal year ended December 31, 2009 and ending with the fiscal year ending December 31, 2017. However, if the issuance of a tranche would
cause a default under any other securities then existing, UAL may satisfy its obligations with respect to such tranche by issuing UAL common stock having a
market value equal to $62.5 million. Each issued tranche will mature 15 years from its respective issuance date, with interest payable in cash in semi-annual
installments, and will be callable, at UAL’s option, at any time at par, plus accrued and unpaid interest.
Amended Credit Facility
The Amended Credit Facility is comprised of two separate tranches: (i) a Tranche A consisting of $255 million revolving commitment available for
Tranche A loans and standby letters of credit and (ii) a Tranche B consisting of a term loan which had a balance of $1,255 million as of December 31, 2009. The
Tranche A loans mature on February 1, 2012 and the Tranche B loans mature on February 1, 2014.
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