United Airlines 2010 Annual Report Download - page 146

repurchase all or a portion of the notes for cash, common stock or a combination thereof, at its option, at par plus
any accrued and unpaid interest if certain changes in control of UAL occur. The UAL 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.
United Amended Credit Facility. United’s 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 $1,237 million as of
December 31, 2010. The Tranche A loans mature on February 1, 2012 and the Tranche B loans mature on
February 1, 2014.
Borrowings under the Amended Credit Facility bear interest at a floating rate, which, at United’s option, can
be either a base rate or a LIBOR rate, plus an applicable margin of 1.0% in the case of base rate loans and 2.0%
in the case of LIBOR loans. The Tranche B term loan requires regularly scheduled semi-annual payments of
principal equal to $9 million. United may prepay some or all of the Tranche B loans from time to time, at a price
equal to 100% of the principal amount prepaid plus accrued and unpaid interest, if any, to the date of
prepayment, but without penalty or premium.
Amended Credit Facility Collateral. United’s obligations under the Amended Credit Facility are
unconditionally guaranteed by United Continental Holdings, Inc. and certain of its direct and indirect domestic
subsidiaries, other than certain immaterial subsidiaries (the “Guarantors”). As of December 31, 2010, the
Amended Credit Facility was secured by certain of United’s international route authorities, international slots,
related gate interests and associated rights, aircraft, spare engines, primary slots at LaGuardia and Washington
Reagan and flight simulators. The international routes include the Pacific (including China and Hong Kong, but
excluding Japan) and London Heathrow routes (the “Primary Routes”) that United had as of February 2, 2007.
Amended Credit Facility Covenants. The Amended Credit Facility contains covenants that in certain
circumstances may limit the ability of United and the Guarantors to, among other things, incur or guarantee
additional indebtedness, create liens, pay dividends on or repurchase stock, make certain types of investments,
enter into transactions with affiliates, sell assets or merge with other companies, modify corporate documents or
change lines of business.
UAL and United must maintain a specified minimum 1.5 to 1.0 ratio of EBITDAR to the sum of the
following fixed charges for all applicable periods: (a) cash interest expense and (b) cash aircraft operating rental
expense. EBITDAR represents earnings before interest expense net of interest income, income taxes,
depreciation, amortization, aircraft rent and certain other cash and non-cash credits and charges as further defined
by the Amended Credit Facility. The other adjustments to EBITDAR include items such as foreign currency
transaction losses, increases in our deferred revenue obligation, share-based compensation expense,
non-recurring or unusual losses, any non-cash non-recurring charge or non-cash restructuring charge, a limited
amount of cash restructuring charges, certain cash transaction costs incurred with financing activities and the
cumulative effect of a change in accounting principle.
The Amended Credit Facility also requires compliance with the following financial covenants: (i) a
minimum unrestricted cash balance (as defined by the Amended Credit Facility) of $1.0 billion at all times, and
(ii) a minimum collateral ratio of 150% at any time, or 200% at any time following the release of the Primary
Routes having an appraised value in excess of $1 billion in the aggregate, unless the Primary Routes are the only
collateral then pledged, in which case a minimum collateral ratio of 150% is required. To date, Primary Routes
having an appraised value of $875 million have been released. The minimum collateral ratio is calculated as the
market value of collateral to the sum of (a) the aggregate outstanding amount of the loans, plus (b) the undrawn
amount of outstanding letters of credit, plus (c) the unreimbursed amount of drawings under such letters of credit
and (d) the termination value of certain interest rate protection and hedging agreements with the Amended Credit
Facility lenders and their affiliates.
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