Indianapolis Airport begins tender offer for series 1995A 6.5% bonds

By Tali David

Minneapolis, June 20 - The Indianapolis Airport Authority commenced a cash tender offer for any and all of its $170,763,804 of outstanding United Air Lines, Inc., Indianapolis Maintenance Center Project 6.5% series 1995A special facility revenue bonds due Nov. 15, 2031.

In connection with the tender offer, the Authority is soliciting consents from bondholders for an amendment that provides a new operating arrangement for the center. The amendment is intended to simplify the operations and flow of funds at the center and to terminate a settlement agreement that was negotiated after possession of the center reverted to the Authority following United Air Line's filing for bankruptcy. The settlement agreement outlines a structure by which the Authority markets, leases and pays the costs of operating the center.

The Authority is soliciting consents because it believes that (i) the operating model established by the settlement agreement is not likely to generate sufficient pledged revenues to pay the bonds, (ii) significant capital expenditures are needed at the center, but no sufficient source of funding exists for those expenditures, (iii) operating the center is a drain on staff and cash and provides little benefit to bondholders, and (iv) significant vacant and undeveloped land is encumbered by the bonds.

Holders who validly tender their notes and deliver their consent before the offer expiration, 5 p.m. ET on July 19, will receive $38.06 for each $1,000 principal amount of notes, according to a press release. The cash price is "significantly higher" than the price of any trade executed for the bonds during the last year, the release noted.

Holders may not tender their notes without delivering consents or vice versa.

The settlement date is July 26.

The tender offer is subject to the completion of receipt of valid tender offers with respect to at least a majority of the original face amount of the bonds and, after the tender date, the amendment is executed and becomes effective, resulting in, among other things, the termination of the settlement agreement.

Siebert Brandford Shank & Co., LLC (646 775-4860, attention John Zurlo or Andrew Gurley) is the dealer agent. Wells Fargo Bank, NA (800 344-5128) is the tender agent.

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