UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report (Date of earliest event reported): April
30, 2007
DELTA
AIR LINES, INC.
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(Exact
name of registrant as specified in its
charter)
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Delaware
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001-05424
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58-0218548
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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P.O.
Box 20706, Atlanta, Georgia 30320-6001
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(Address
of principal executive offices)
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Registrant’s
telephone number, including area code: (404)
715-2600
Registrant’s
Web site address: www.delta.com
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
Item
1.01 Entry into a Material Definitive Agreement
On
April
30, 2007, Delta Air Lines, Inc. (“Delta” or “we”) consummated the transactions
contemplated by its Plan of Reorganization, which became effective on that
date. In connection with the consummation of the Plan of Reorganization,
we entered into a new senior secured exit financing facility (the “Exit
Facilities”) as described in Item 2.03 of this Form 8-K and initiated the
distributions under the Plan of Reorganization, including equity securities
to
holders of general unsecured claims as described in Item 3.02 of this Form
8-K.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
On
April
30, 2007 (the “Closing Date”), we entered into the Exit Facilities to borrow up
to $2.5 billion from a syndicate of lenders. Proceeds from the Exit Facilities
and existing cash were used to repay the outstanding principal amounts of $1.9
billion and $115 million, together with interest thereon and all other amounts,
in each case, outstanding under the Amended and Restated DIP Credit Facility
and
the Amex Post-Petition Facility,
respectively (each as defined in Note 6 of the Notes to our Consolidated
Financial Statements as filed our Annual Report on Form 10-K for the fiscal
year
ended December 31, 2006). The remainder of the proceeds from the Exit Facilities
and the letters of credit issued thereunder will be available to provide
back-to-back letters of credit in respect of letters of credit outstanding
under
the Amended and Restated DIP Credit Facility, pay certain accrued administrative
expenses, finance working capital and for other general corporate purposes.
The
Exit
Facilities consist of a $1.0 billion first-lien revolving credit facility,
up to
$400 million of which may be used for the issuance of letters of credit (the
“Revolving Facility”), a $600 million first-lien synthetic revolving facility
(the “Synthetic Facility” and, together with the Revolving Facility, the
“First-Lien Facilities”), and a $900 million second-lien term loan facility (the
“Term Loan” or the “Second-Lien Facility”). The Exit Facilities were arranged by
(1) J.P. Morgan Securities Inc. and Lehman Brothers Inc. with respect to the
First-Lien Facilities, for which JPMorgan Chase Bank, N.A. will act as the
administrative agent and collateral agent and UBS Securities LLC will act as
the
syndication agent and (2) Goldman Sachs Credit Partners L.P. (“GSCP”) and
Merrill Lynch Commercial Finance Corp. with respect to the Second-Lien Facility,
for which GSCP will act as the administrative agent and collateral agent and
Barclays Capital, the investment banking division of Barclays Bank PLC, will
act
as the syndication agent.
The
scheduled maturity dates for the First-Lien Facilities and the Second-Lien
Facility are the fifth and seventh anniversaries, respectively, of the Closing
Date of the Exit Facilities. Upon the occurrence of an event of default, the
outstanding obligations under the Exit Facilities may be accelerated and become
due and payable immediately, as more fully discussed below.
The
First-Lien Facilities bear interest, at our option, at LIBOR plus 2.0% or an
index rate plus 1.0%; the Second-Lien Facility bears interest, at our option,
at
LIBOR plus 3.25% or an index rate plus 2.25%. Interest is payable (1) with
respect to LIBOR loans, on the last day of each relevant interest period
(defined as one, two, three or six months or any longer period available to
all
lenders under the relevant facility) and, in the case of any interest period
longer than three months, on each successive date three months after the first
day of such interest period, and (2) with respect to indexed loans, quarterly
in
arrears.
Our
obligations under the Exit Facilities are guaranteed by substantially all of
our
domestic subsidiaries (the “Guarantors”). The Exit Facilities and the related
guarantees are secured by liens on substantially all of our and the Guarantors’
present and future assets that previously secured the Amended and Restated
DIP
Credit Facility on a first priority basis (the “Collateral”). The First-Lien
Facilities are secured by a first priority security interest in the Collateral.
The Second-Lien Facility is secured by a second priority security interest
in
the Collateral.
We
are
required to make mandatory repayments of the Exit Facilities, subject to certain
reinvestment rights, from the sale of any Collateral or receipt of insurance
proceeds in respect of any Collateral in the event we fail to maintain the
minimum collateral coverage ratios described below. Any portion of the Exit
Facilities that is repaid through mandatory prepayments may not be reborrowed.
Any portion of the Term Loan that is voluntarily repaid may also not be
reborrowed.
The
Exit
Facilities include affirmative, negative and financial covenants that restrict
our ability to, among other things, incur additional secured indebtedness,
make
investments, sell or otherwise dispose of assets if not in compliance with
the
collateral coverage ratio tests, pay dividends or repurchase stock. These
covenants provide us with increased financial and operating flexibility as
compared to the DIP Facilities, but may still have a material impact on our
operations.
The
Exit
Facilities contain financial covenants that require us to:
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maintain
a minimum fixed charge coverage ratio (defined as the ratio of (1)
earnings before interest, taxes, depreciation, amortization and aircraft
rent, and subject to other adjustments to net income (“EBITDAR”) to (2)
the sum of gross cash interest expense, cash aircraft rent expense
and the
interest portion of our capitalized lease obligations, for successive
trailing 12-month periods ending at each quarter-end date through
the
maturity date of the respective Exit Facilities), which minimum ratio
will
range from 1.00:1 to 1.20:1 in the case of the First-Lien Facilities
and
from 0.85:1 to 1.02:1 in the case of the Second-Lien
Facility;
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maintain
unrestricted cash, cash equivalents and short-term investments in
accounts
subject to control agreements in favor of the collateral agent in
an
aggregate amount not less than $750 million in the case of the First-Lien
Facilities and $650 million in the case of the Second-Lien Facility,
in
each case at all times following the 30th
day after the Closing Date;
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maintain
a minimum total collateral coverage ratio (defined as the ratio of
(1)
certain of our Collateral that meets specified eligibility standards
(“Eligible Collateral”) to (2) the sum of the aggregate outstanding
exposure under the First-Lien Facilities and the Second-Lien Facility
and
the aggregate termination value of certain hedging agreements) of
125% at
all times; and
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in
the case of the First-Lien Facilities, also maintain a minimum first-lien
collateral coverage ratio (together with the total collateral coverage
ratio described above, the “collateral coverage ratios”) (defined as the
ratio of (1) Eligible Collateral to (2) the sum of the aggregate
outstanding exposure under the First Lien Facilities and the aggregate
termination value of certain hedging agreements) of 175% at all
times.
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The
Exit
Facilities contain events of default customary for Chapter 11 exit financings,
including cross-defaults to other material indebtedness and certain change
of
control events. The Exit Facilities also include events of default specific
to
our business, including if all or substantially all of our flights and other
operations are suspended for more than two consecutive days (other than as
a
result of an FAA suspension due to extraordinary events similarly affecting
major U.S. air carriers). As noted above, upon the occurrence of an event of
default, the outstanding obligations under the Exit Facilities may be
accelerated and become due and payable immediately.
Item
3.02 Unregistered Sales of Equity Securities
Under
the
Plan of Reorganization, 386 million shares of Delta common stock are to be
distributed to certain holders of general unsecured claims
under
the Plan of Reorganization. It is currently expected that approximately 160
million of such shares will be reserved for distribution with respect to
unresolved claims. Delta relied, based on the confirmation order it
received from the Bankruptcy Court, on Section 1145(a)(1) of the U.S.
Bankruptcy Code to exempt from the registration requirements of the Securities
Act of 1933 the offer and sale of Delta common stock to the general unsecured
creditors. Section 1145(a)(1) of
the Bankruptcy Code exempts the offer and sale of securities under a plan of
reorganization from registration under Section 5 of the Securities Act and
state laws if three principal requirements are satisfied:
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the
securities must be offered and sold under a plan of reorganization
and
must be securities of the debtor, of an affiliate participating in
a joint
plan of reorganization with the debtor or of a successor to the debtor
under the plan of reorganization;
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the
recipients of the securities must hold claims against or interests
in the
debtor; and
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the
securities must be issued in exchange, or principally in exchange,
for the
recipient’s claim against or interest in the
debtor.
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Item
5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
(e)
As
previously reported in a Form 8-K filed with the SEC on March 22, 2007, Delta
adopted the Delta Air Lines, Inc. 2007 Performance Compensation Plan, the Delta
Air Lines, Inc. 2007 Officer and Director Severance Plan, and targets and
performance measures under the 2007 Management Incentive Plan (“MIP”), which is
part of the 2007 Performance Compensation Plan, all subject to approval of
Delta’s Joint Plan of Reorganization by the U.S. Bankruptcy Court. All of these
plans became effective upon Delta’s emergence from Chapter 11 on April 30, 2007.
The form of award agreement under which emergence equity-based awards will
be
made pursuant to the 2007 Performance Compensation Plan to officers is attached
hereto as Exhibit 10.1. The form of agreement for officers under the 2007
Officer and Director Severance Plan is attached hereto as Exhibit
10.2.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
In
connection with its emergence from Chapter 11, Delta adopted an Amended and
Restated Certificate of Incorporation and new Bylaws that are effective April
30, 2007. These documents are filed as Exhibits 3.1 and 3.2 to the Form
8-K and incorporated herein by reference.
Item
8.01 Other Events.
On
April
30, 2007, Delta issued a press release announcing Delta’s emergence from Chapter
11. A copy of the press release is attached hereto as Exhibit 99.1.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
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Exhibit
3.1
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Amended
and Restated Certificate of Incorporation of Delta Air Lines,
Inc.
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Exhibit
3.2
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Bylaws
of Delta Air Lines, Inc.
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Exhibit
10.1
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Form
of Delta 2007 Performance Compensation Plan Award Agreement for
officers
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Exhibit
10.2
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Form
of Separation Agreement and General Release - Delta Air Lines, Inc.
2007
Officer and Director Severance Plan for officers
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Exhibit
99.1
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Press
Release dated April
30, 2007 titled
“Delta Air Lines Exits Chapter 11 Stronger and Better Positioned for
New
Era of Competition”
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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DELTA
AIR LINES, INC.
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By:
/s/
Edward H. Bastian
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Date:
April 30, 2007
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Edward H. Bastian
Executive Vice President - Chief Financial
Officer
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EXHIBIT
INDEX
Exhibit
Number
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Description
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Exhibit
3.1
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Amended
and Restated Certificate of Incorporation of Delta Air Lines,
Inc.
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Exhibit
3.2
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Bylaws
of Delta Air Lines, Inc.
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Exhibit
10.1
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Form
of Delta 2007 Performance Compensation Plan Award Agreement for
officers
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Exhibit
10.2
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Form
of Separation Agreement and General Release - Delta Air Lines, Inc.
2007
Officer and Director Severance Plan for officers
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Exhibit
99.1
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Press
Release dated April
30, 2007 titled
“Delta Air Lines Exits Chapter 11 Stronger and Better Positioned for
New
Era of Competition”
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6