Mesa Air to issue new notes, stock and warrants under Chapter 11 plan

By Caroline Salls

Pittsburgh, Sept. 20 - Mesa Air Group, Inc. filed a plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the Southern District of New York.

The plan calls for the reorganization of the company through the issuance of new common stock by the ultimate corporate parent, which will be reorganized Mesa Air Group, as well as the issuance of new 8% notes and a U.S. Air note issued by reorganized Mesa Air Group.

In addition, Mesa said U.S. Airways will receive roughly 10% of the new common stock in consideration of its code-share amendment, and a management equity pool will be reserved for distribution under an equity incentive plan to be established by the reorganized board of directors.

The reorganized company will also issued new warrants to acquire shares of new common stock.

The plan will be funded by way of cash on hand, revenues from ordinary course operations and asset sale proceeds.

Treatment of creditors will include:

• Holders of administrative claims, priority tax claims and priority non-tax claims will be paid in full;

• Holders of secured claims will either receive a cash payment, receive the collateral securing their claims or have their claims rendered unimpaired;

• Holders of general unsecured claims and 510(a) subrogation claims will receive a share of the restructured unsecured equity and the new 8% notes; and

• Interest holders will receive no distribution.

The disclosure statement hearing is scheduled for Oct. 26.

Mesa Air, a Phoenix-based provider of passenger and airfreight services, filed for bankruptcy on Jan. 5, 2010. The Chapter 11 case number is 10-10018.

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