This excerpt taken from the MAIR 8-K filed Jan 22, 2007.
Mesaba Also Reaches Agreement with NWA on Related Transaction
Minneapolis/St. Paul (January 22, 2007) MAIR Holdings, Inc. (NASDAQ: MAIR) today reported the terms of two agreements, one a definitive agreement between MAIR and Northwest Airlines (NWA) and the other a definitive agreement between MAIRs Mesaba Airlines subsidiary and NWA under which Mesaba will exit bankruptcy as an operating subsidiary of NWA.
We believe that the transition of Mesaba to Northwest is a good outcome for all parties in Mesabas bankruptcy, said Paul Foley, MAIR Holdings president and chief executive officer. It provides potential value for our shareholders and allows us to fully pursue other opportunities, both through Big Sky and in new areas.
The agreement between MAIR and NWA contains the following terms:
· MAIR will purchase from NWA all of the MAIR stock NWA currently owns for an aggregate purchase price of $6.25 per share, or approximately $35 million. NWA owns approximately 5.7 million shares.
· Approximately $24 million of the aggregate purchase price, or $4.25 per share, will be paid upon the initial closing of the transaction, expected to occur prior to April 15, 2007.
· The remainder of the purchase price, approximately $11 million, or $2.00 per share, will be paid on the earlier of the date upon which MAIR receives at least $25 million in equity distributions from Mesabas bankruptcy estate or nine months from the execution of the agreement.
· NWAs Warrant to purchase 4.1 million shares of MAIRs stock will terminate upon closing of the agreement.
· NWAs bankruptcy claim of $7.3 million in Mesabas bankruptcy will be assigned to MAIR at the time of the closing of the Stock Purchase and Reorganization Agreement (SPRA) outlined below.
· NWA will allow Mesaba, upon closing of the SPRA, to use up to $4.5 million to satisfy certain contracts to be assumed by Mesaba in its bankruptcy proceedings, thereby reducing the claim pool in Mesabas bankruptcy estate.
· NWA and MAIR will execute a mutual release of all claims against each other, including MAIRs bankruptcy claim against NWA.
· MAIR will provide its consent to allow Mesaba to sign the SPRA and to file its plan of reorganization.
The agreement between MAIR and Northwest is dated January 22, 2007.
In a related but separate transaction, Mesaba and NWA agreed under the SPRA to the following terms:
· NWA will allow a claim of $145 million by Mesaba in NWAs bankruptcy case.
· Mesabas current equity will be cancelled and new equity will be issued to NWA under Mesabas plan, making Mesaba a subsidiary of NWA.
· Mesaba will be allowed to monetize its $145 million claim against NWA through a sale which is expected to occur in the next 30 days.
· Mesaba will file a plan of reorganization with its bankruptcy court that will implement the terms of the SPRA and provide for a release of any claims Mesaba may have against MAIR.
· NWA and Mesaba will execute a mutual release of all claims against each other.
The agreement between Mesaba and Northwest is also dated January 22, 2007.
Mesaba currently estimates that the final allowed amount of bankruptcy claims against Mesaba will be approximately $90 million. Assuming Mesabas claims are between $90 million and $100 million, and assuming that Mesaba is able to monetize its NWA claim at the current market price of 85%-95% of the total allowed claim, MAIR estimates that it could receive approximately $30 million to $60 million after all distributions are made in accordance with Mesabas plan of reorganization.
Both agreements must be approved by the bankruptcy courts overseeing, separately, the NWA and Mesaba Chapter 11 proceedings.