Private equity firm Perseus has stepped up to provide Frontier Airlines with a $75 million commitment in post-petition debtor-in-possession (DIP) financing.
Perseus, which is based in Washington DC, has also agreed to serve as equity sponsor for Frontier’s plan of reorganization, allowing the firm to purchase 79.9% of the equity in the reorganised company for $100 million.
Frontier filed a motion today with the US Bankruptcy Court for the Southern District of New York. Upon court approval, Perseus will provide funding under the proposed DIP credit facility in two instalments to support the company’s working capital needs.
In 2005, Perseus failed in a last-minute takeover bid for Aloha Airlines to the Yucaipa group and aviation investor and football star Willie Gault.
“We are enthusiastic about the opportunity to invest in the future of Frontier,” says Brian Leitch, MD of Perseus.
“Although Frontier has been buffeted by recent fuel price increases and certain other issues, we believe that Frontier has proven that it deserves a chance to succeed in this challenging market, and we are proud to help it do so.”
Earlier this month, the airline received bankruptcy court approval to defer seven Airbus aircraft for approximately two years each. The aircraft are identified as part of a 10 March 2000 Airbus A318/A319 purchase agreement.
The net payable immediately due to Frontier is “approximately $7.5 million, after effecting a cure payment of approximately $984,000 and a pre-petition setoff of credits otherwise owed to Frontier of approximately $96,000,” according to court documents. This money will provide “needed liquidity to fund the Frontier’s operations, providing an immediate benefit to the Debtors’ [Frontier Airlines] estates.”