US Airways has worked out a deal with the Air Transportation Stabilization Board under which the airline will buy back $116 million worth of stock warrants that were used to help guarantee an ATSB loan to America West.
The new US Airways Group -- formed by the merger of US Airways and America West -- is buying back the stock warrants with some of the extra equity it gained during the merger. The 7.7 million warrants let the ATSB buy common stock at an exercise price of $7.27 a share. The warrants were created in 2002, when the ATSB guaranteed a $439 million loan for America West.
US Airways CEO Doug Parker said the airline decided to use "a portion of [its] cash balances to purchase the outstanding warrants held by the ATSB, which we believe is in the best interests of the shareholders of the new US Airways." The merger "has been supported by more than $800 million in new equity investments, and we expect to have approximately $2.5 billion in total cash when certain transactions close this week," he said.
Parker said the new company is "particularly pleased to meet our commitment to the ATSB." The America West loan "continues to be repaid on schedule, with interest," and the ATSB "is now receiving an additional $116 million for the warrants." Parker said that when America West received the ATSB loan, "we believed taxpayers would be well compensated...We are pleased to be part of making that happen.
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