Mesaba closes on $24 million DIP

By Caroline Salls

Pittsburgh, Nov. 13 - Mesaba Aviation, Inc. closed on its debtor-in-possession financing by entering into a $24 million revolving credit and guaranty agreement with Marathon Structured Finance Fund, LP, according to an 8-K filing with the Securities and Exchange Commission.

As part of the DIP agreement, Mesaba granted to Marathon an allowed administrative expense claim in Mesaba's bankruptcy case and a perfected first-priority security interest and lien on all of Mesaba's property and assets.

Interest on the DIP is Libor plus 600 basis points.

The monthly unused line fee is at the rate of 0.5% per annum on the average daily total unused amount of the commitment during the preceding month. The agreement terminates on the earlier of Nov. 6, 2008, the effective date of Mesaba's reorganization plan and upon the acceleration of the loans.

If the agreement is terminated or if the loan obligations are prepaid in full for any reason before April 11, 2008, Mesaba will be required to pay an early termination fee.

If the early termination occurs before Nov. 7, 2007, the early termination fee will be equal to 1.5% of the greater of $24 million or the actual amount of loans extended to Mesaba; if the early termination occurs between Nov. 7, 2007 and April 10, 2008, the termination fee will be reduced to 0.5% of the same amounts.

The DIP agreement also requires Mesaba to continue to negotiate with Northwest Airlines, Inc. on the terms of any new airline services agreement and actively operate at least 40 aircraft.

Mesaba is also obligated to use its best efforts to sell excess equipment and spare parts as its fleet size is being reduced.

Mesaba, an Eagan, Minn.-based Northwest Airlines affiliate, filed for bankruptcy on Oct. 13, 2005 in the U.S. Bankruptcy Court for the District of Minnesota. Its Chapter 11 case number is 05-39258.

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