Airtran 2010 Annual Report Download - page 93

Fixed Rate B717 Aircraft Notes Payable
Principal and interest payments on the enhanced equipment trust certificates (EETCs) are due semiannually through April
2017. As of December 31, 2010, eight B717 aircraft were pledged as collateral for Airways’ obligations related to the
EETCs.
Floating Rate B737 Aircraft Pre-delivery Deposit Financing
We arranged loan facilities (each a “PDP facility”) for purposes of financing a portion of our obligations to make pre-
delivery payments to Boeing with respect to B737 aircraft on order. The amount outstanding under each PDP loan is paid
off at the time the respective aircraft is delivered. As of December 31, 2009, all PDP facility borrowings had been paid off
and no amounts were available for us to borrow in the future.
7.0% Convertible Notes
In May 2003, we completed a private placement of $125 million of our 7.0% convertible notes due in 2023, which we
refer to as our 7.0% convertible notes. The net proceeds from such offering were used for general corporate purposes
including improving our overall liquidity by providing working capital. Such notes bear interest at 7 percent, payable
semi-annually on January 1 and July 1. The 7.0% convertible notes are unconditionally guaranteed by Airways and rank
equally with all unsecured obligations of Airways. Such notes and the note guarantee are junior to any secured obligations
of Holdings or Airways to the extent of the collateral pledged and are also effectively subordinated to all liabilities of our
subsidiaries (other than Airways).
The 7.0% convertible notes are convertible into shares of our common stock at a conversion rate of 89.9281 shares per
$1,000 in principal amount of the notes which equals an initial conversion price of approximately $11.12 per share. This
conversion rate is subject to adjustment in certain circumstances. We may redeem the 7.0% convertible notes, in whole or
in part, for cash, at a redemption price equal to the principal amount of the notes plus any accrued and unpaid interest.
Holders of 94% of our 7.0% convertible senior notes as of June 30, 2010, aggregating $90.4 million principal amount,
exercised their right to require us to repurchase the notes in July 2010. We elected to pay the repurchase price in cash in
July 2010. As of December 31, 2010, an aggregate of $5.5 million of our 7.0% convertible senior notes remain
outstanding.
The holders of the remaining 7.0% convertible notes may require us to repurchase the notes on July 1, 2013, and 2018 at a
repurchase price of 100 percent of principal amounts plus any accrued and unpaid interest. We may, at our option, elect to
pay the repurchase price in cash, in shares of our common stock, or in any combination of the two. If we elect to pay the
repurchase price, in whole or in part in shares of our common stock, the number of shares to be delivered in exchange for
the portion of the repurchase price to be paid in our common stock will be equal to that portion of the repurchase price
divided by 97.5% of the closing sale price of our common stock for the five trading days ending on the third business day
prior to the applicable repurchase date (appropriately adjusted to take into account the occurrence of certain events that
would result in an adjustment of the conversion rate with respect to our common stock).
We separately account for the debt and equity components of the 7.0% convertible notes in a manner that reflects our
estimated non-convertible debt borrowing rate of 15% as of May 2003, consistent with ASC 470-20, “Debt with
Conversion and Other Options – Cash Conversion”. The principal amount, unamortized discount, net carrying amount of
the debt, and equity components are (in thousands):
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