United Raises $438 Million to Strengthen Liquidity
Dear Fellow Employee,
Yesterday, we successfully priced the common stock and debt offerings we announced Wednesday. We were pleased that investors showed a strong interest in our offerings, allowing us to increase the size of the offering to approximately $438 million, compared to our initial offering of $350 million. We have also made allowances for a possible over-allotment (a common practice for this type of transaction) which could bring the gross proceeds to approximately $500 million.
As we described in our announcement Wednesday, our offerings were in the form of both common stock and convertible senior notes. Excluding any possible over-allotment, we have offered 19 million shares of common stock for approximately $138 million, and $300 million in convertible senior notes at 6.0%, slightly better than the rate American Airlines secured in their recent, very similar transaction.
In our most recent update to investors on our financial outlook, we said we expected to end the third quarter with an unrestricted cash balance of approximately $2.6 billion. Yesterday’s transaction further builds on that already solid cash position. Strengthening our liquidity position is among many steps that we are taking to position us well for the coming recovery.
As we discussed yesterday with investors, we are continuing to build strong momentum on all of our Focus on 5 imperatives thanks to the work you are doing to deliver against those goals. The substantial progress we have made to improve our non-fuel cost performance, the improvements we’ve made to product and service quality across the board, and our No. 1 year-to-date on time performance are clearly being noted by both our customers and our investors.
We are taking the right actions to successfully navigate this recessionary environment and to position United for long-term success. As the improving economic environment brings back the business traveler, we are in an excellent position to reap the benefits.
While there is more work to do, we should all be proud of the progress we have made, and confident in our future.
I look forward to talking with you again later this month when we announce our third-quarter results.
Lastly, as was noted in our press release regarding the offerings, this internal communication does not constitute an offer to sell or a solicitation to buy any securities. A written prospectus for either offering may be obtained, when available, from sales representatives of J.P. Morgan Securities Inc., National Statement Processing, Prospectus Library, 4 Chase Metrotech Center, CS Level, Brooklyn, New York 11245; (718) 242-8002; Morgan Stanley & Co. Incorporated, 180 Varick Street, 2nd Floor, New York, New York 10014, Attention: Prospectus Department (email: prospectus@morganstanley.com); and Goldman, Sachs & Co., Attention: Prospectus Department, 85 Broad Street, New York, New York 10004, telephone (212) 902-1171 or toll-free (866) 471-2526 or by emailing prospectus-ny@ny.email.gs.com.
Kathryn Mikells
EVP and CFO