Republic Airways and Delta Air Lines have signed a $75 million debtor-in-possession (DIP) financing agreement.
The secured term facility, which acts as a revolving credit facility, carries an interest rate of 5.75% with a 1% commitment fee on the undrawn principal, a court filing on 24 March shows. It has a one-year maturity from closing, which is subject to Chapter 11 bankruptcy court approval.
Republic will use the proceeds for working capital and general corporate purposes.
The debt is secured by one Embraer 170 (registration N638RW and MSN 17000053), two General Electric CF34 engines, 10 CFM International CFM34 engines and 15 slots at New York LaGuardia airport, the filing shows.
The DIP financing is part of a settlement Delta and Republic reached in the former's lawsuit filed in 2015. The suit alleged more than $1 million in economic damage from the regional carrier’s inability to meet its flying commitments.
The two carriers have agreed to wind down the 36 Embraer ERJ-145s that Republic still flies for Delta, while Republic will maintain its fleet of Embraer E-Jets operating as Delta Connection.
Delta was selected as lender of the DIP financing after Republic adviser Seabury contact 40 potential lenders in February. The regional airline received five qualifying bids and Delta was selected from three finalists.
A hearing on the financing agreement and settlement is scheduled for 14 April in New York.