AMR Corp. offers planes as collateral for $1.5 billion in financing
BY DAVID MCLAUGHLIN Bloomberg News
Thursday, October 11, 2012
10/11/12 at 2:38 AM
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Original Print Headline: AA offers jets as collateral for $1.5 billion in financing
AMR Corp., the airline owner restructuring in bankruptcy, is seeking court approval to obtain as much as $1.5 billion in financing backed by aircraft that it said will reduce interest expenses.
Forth Worth-based AMR has negotiated terms of the financing and will repay $1.3 billion in outstanding notes, the parent company of American Airlines said in a filing in U.S. Bankruptcy Court in Manhattan, N.Y.
"Time is of the essence because there can be no assurance that market conditions will continue," the company said.
AMR's $174.2 million of 13 percent secured notes due in August 2016 dropped 3 cents to 103.5 cents on the dollar at Wednesday in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Its $703.6 million of 8.625 pass-through certificates plunged 4 cents to 103.5.
The airline wants to redeem the 13 percent notes, the 8.625 certificates and $445.6 million of 10.375 percent pass-through debt "without the payment of any make-whole amount" or "any other premium or prepayment penalty," AMR said in the court filing.
AMR said interest-expense savings under the financing may be more than $200 million. The request requires approval from U.S. Bankruptcy Judge Sean Lane.
American employs about 7,000 people in Tulsa, where it has its largest maintenance base.