Mesa Air restructures 6.25% convertibles; holders put $30.4 million

By Angela McDaniels

Tacoma, Wash., Feb. 3 - Mesa Air Group, Inc. said holders of $30.4 million principal amount at maturity of its 6.25% senior convertible notes due 2023 exercised their Jan. 31 put option.

The convertibles had a put value of $12.6 million, according to a company news release.

To satisfy the put, Mesa Air paid $1.8 million in cash and will issue 11.9 million shares of common stock and $1 million of new 8% senior unsecured notes due 2012. The issuance of the notes and shares is expected to close on Feb. 10.

Following the put, $21.7 million principal amount at maturity of 6.25% convertibles with a put value of $9 million as of Jan. 31 remain outstanding.

These convertibles may be put back no earlier than June 16, 2013, and Mesa Air said it may satisfy the put option with cash, stock or a combination.

As previously reported on Jan. 22, the company entered into restructuring agreements with some holders of the 6.25% convertibles and of its 3.625% senior convertible notes due 2024.

Holders of $15.6 million principal amount at maturity of the 6.25% convertibles agreed to waive their Jan. 31 put right.

In addition, holders agreed to exchange $18.9 million principal amount at maturity of the 6.25% convertibles and $70.9 million principal amount at maturity of the 3.625% convertibles for a total of $5.6 million in cash, 13.6 million shares of common stock and $14.3 million of the new 8% notes.

Then on Jan. 29, the company announced that only the holders of its 6.25% convertibles who entered into forbearance agreements with the company may exercise their put option.

"We are pleased to have reached agreements with a significant portion of our noteholders under terms, which we believe are in the best interest of all parties," chairman and chief executive officer Jonathan Ornstein said in the release.

"We have also come to an agreement with a majority of the holders of our senior convertible notes due 2024 and continue to have discussions with the remaining 2024 noteholders. The terms of the agreements require significantly less shares of common stock to be issued than we originally anticipated. We remain optimistic that the company will be successful in the long term."

Mesa Air, a Phoenix-based provider of passenger and airfreight services, noted that definitive agreements still need to be reached and gave no assurances that these transactions will close or that the capital structure described above will not change prior to Feb. 10.

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