UAL Corp. files reorganization plan

UAL Corp. files reorganization plan    Chicago-based UAL Corp. Wednesday filed a plan of reorganization (POR) and disclosure statement with the U.S. Bankruptcy Court for the Northern District of Illinois.
   The reorganization plan includes UAL, United Airlines and 26 other subsidiaries that filed for voluntary Chapter 11 reorganization in December 2002.
   UAL said that under the POR, unsecured creditors generally will receive distributions of new UAL common stock to settle their claims, while current holders of UAL common stock, preferred stock and the 13.25 percent Trust Originated Preferred Securities would receive no distribution, and those securities would be canceled upon the effective date of the plan.
   UAL’s disclosure statement included a description of distributions to creditors and an analysis of the plan’s feasibility, as well as technical matters required for the exit process, such as descriptions of who will be eligible to vote on the POR and the voting process itself.
   UAL expects its common stock to be without value under the plan. The filing also contemplates a $2.5 billion, all-debt exit financing package. UAL said it has received proposals from four different institutions for exit financing.
   “The exit financing proposals we have received are a significant vote of confidence in the progress we have made over the course of our restructuring, our business plan and ultimately, United’s future — and in our ability to manage through a complex industry environment, including unpredictable fuel costs,” said Jake Brace, United executive vice president and chief financial officer.
   UAL said it is exploring the possibility of a rights offering in which it would offer unsecured creditors the opportunity to purchase, on a pro rata basis, approximately $500 million in value of new UAL common stock with any proceeds used to provide additional capital for ongoing operational needs and/or to reduce the amount of the exit financing facility.
   A hearing on the adequacy of the disclosure statement is scheduled Oct. 11. Court approval will allow UAL to begin solicitation of votes for confirmation of the POR.