Mesaba disclosure statement approved; plan confirmation hearing set for April 9

By Caroline Salls

Pittsburgh, Feb. 28 - Mesaba Aviation, Inc. obtained court approval of the disclosure statement for its plan of reorganization, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Minnesota.

The plan confirmation hearing is scheduled for April 9.

Under the plan, Mesaba will emerge from bankruptcy as an operating subsidiary of Northwest Airlines, Inc.

Under the agreement between Mesaba and Northwest, which is included in Mesaba's plan of reorganization:

• Northwest will allow a $145 million claim by Mesaba in Northwest's bankruptcy case;

• Mesaba's current equity will be cancelled and new equity will be issued to Northwest, making Mesaba a subsidiary of Northwest;

• Mesaba will be allowed to monetize its $145 million claim against Northwest through a sale;

• Mesaba will release its claims against MAIR Holdings, Inc.; and

• Northwest and Mesaba will execute a mutual release of claims against each other.

As previously reported, Northwest obtained court approval of settlements with Mesaba and Mair that allow Northwest to enter into the stock purchase and reorganization agreement under which it will buy Mesaba's operations.

Creditor treatment

Also under Mesaba's plan of reorganization:

• Holders of miscellaneous secured claims will receive a full recovery through cash collateral for their claims within 10 days of the allowance date;

• Holders of general unsecured claims will receive distributions, plus interest, of available cash in accordance with a trust agreement under which the company will liquidate its trust assets;

• The equity interest held by MAIR will be cancelled;

• Other equity interest holders will receive cash distributions under the trust agreement;

• Holders of priority claims will receive a full cash recovery, paid through a reserve in the trust within 10 days of the allowance date; and

• Holders of secured tax claims will receive a full recovery in cash or in kind from the trust assets within 10 days of the allowance date.

Mesaba, an Eagan, Minn.-based Northwest Airlines affiliate, filed for bankruptcy on Oct. 13, 2005. Its Chapter 11 case number is 05-39258.

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