Delta Air Lines consent solicitations for aircraft-secured certificates expire without required consents

New York, Sept. 10 - Delta Air Lines Inc. (Caa2/CC) said its effort to solicit consents to proposed indenture changes from the holders of about $1.7 billion of equipment trust certificates and passthrough certificates expired as scheduled at 5 p.m. ET on Sept. 9, without further extension. The company said it had not received the required number of consents from the holders of any of the note series involved.

Delta noted that the consent solicitation only involved a modification which would have affected Delta's flexibility to restructure certain components of its debt and was not a transaction to raise cash. It said that not receiving the required consents from holders of the ETCs and passthrough certificates only affects Delta's ability to include those certificates in certain possible future restructuring steps. Delta said it continues to actively seek solutions that will allow for a successful out-of-court restructuring.

As previously announced, Delta, the Atlanta-based operator of the third-largest U.S. airline carrier, said on Aug. 18 that it had begun soliciting consents from holders of some of its equipment trust certificates and passthrough certificates to give it "greater flexibility to effect a successful out-of-court restructuring."

The company originally set a deadline of 5 p.m. ET on Aug. 31, which was later extended to 5 p.m. ET on Sept. 9.

Delta said it was asking the holders of the certificates to allow Delta to remove any contractual restrictions on its ability to purchase or hold those securities.

Equipment trust certificates covered by the consent solicitation were: 1988 equipment trust certificates, series A, B and C; 1989 equipment trust certificates, series A, B, C, D, E, F, G, H, I and J; 1990 equipment trust certificates, series A, B, C, D, E, F, G, H, I, J and K; 1991 equipment trust certificates series A, B, C, D, E, F, G, H, I, J, K and L; and 1992 equipment trust certificates series A, B, C, D, E and F.

Passthrough certificates covered by the solicitation were: 1992 passthrough certificates series A1, A2, B1 and B2; 1993 passthrough certificates series A1 and A2; and 1996 passthrough certificates series A1 and A2.

On Aug. 24, a group claiming to represent the holders of about $1.3 billion of the senior secured debt subject to the consent solicitation told Delta that it wanted more time to investigate the airline's restructuring plan.

The 34-member Committee of Senior Secured Aircraft Creditors, which was formed in July and which includes insurance companies, pension funds, bond funds and money managers holding "substantial interests" in 169 Delta airliners, said that in its opinion, it would not make any sense to give Delta the consents it needs until the committee completes a substantial examination of Delta's business plan, financial condition and restructuring plan.

On Aug. 26, Delta issued additional information about its solicitations, in a question-and-answer format aimed at justifying its request for the certificateholder consents.

However, later that same day, the Committee of Senior Secured Aircraft Creditors rejected the company's Q&A release as "totally inadequate to address Delta's restructuring plan." It said that Delta had not presented data it needs to evaluate the airline's business plan, financial condition and restructuring plan. The committee said that it would be unable to meet Delta's deadline of Aug. 31, and requested that the company extend the deadline, while providing more information about the restructuring plan.

Merrill Lynch & Co., Goldman, Sachs & Co. and Morgan Stanley & Co. Inc. were the solicitation agents for the unsuccessful solicitation. Global Bondholder Services Corp. was the information agent (call 212 430-3774 or 866 470-3700).

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