Pinnacle, CIT agree on new terms for loan

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Pinnacle Airlines has been authorised to begin clearing out its inventory of spare parts and engines for Saab 340 and Bombardier Q400 turboprop aircraft under an amended credit agreement with CIT Leasing.

The Memphis-based airline filed for bankruptcy protection on 1 April, and announced a restructuring plan that includes winding down turboprop operations at its Colgan Air subsidiary.

Pinnacle's original credit agreement required CIT Leasing to approve the sale of any spares for the Saab 340s and Q400s. But the agreement was amended on 15 May to allow Pinnacle to sell an unlimited number of spare parts and engines without prior consent from CIT, the airline says.

The agreement also says that proceeds from any sales must be used to repay a term loan to CIT, Pinnacle adds.

The bank also agreed to extend the maturity date of the loan to 30 June 2014, the carrier says. The interest rate also was modified to a fixed 8.5%, rather than a combination of floating and fixed rates.

Pinnacle also says that the loan reduced the minimum liquidity threshold from $40 million. It is now the "greater of $20 million and the amount of liquidity required to be maintained by the company pursuant to any debtor in possession financing facility the company's chapter 11 proceeding," the airline says.