Wednesday, November 12, 2003

World Air sells $25 million in debt

Peachtree City’s World Airways, Inc. announced that it has entered into agreements with three institutional holders of its eight percent Convertible Senior Subordinated Debentures Due 2004. Under the agreements, these investors will acquire $25.545 million principal amount of the company's newly issued six-year eight percent Convertible Senior Subordinated Debentures in exchange for $22.545 million principal amount of the Company’s existing 8% Convertible Senior Subordinated Debentures Due 2004 and $3 million in cash. Additionally, the company plans to call the remaining debentures concurrent with the exchange.

Hollis Harris, chairman and CEO of World Airways, said, “This is a major step forward in our plans to restructure our debentures and secure approval for the federal loan guarantee from the Air Transportation Stabilization Board. This, in parallel with our strengthening financial performance, represents very positive news for our company.”

He continued, “Our revenue forecast for this year represents an increase of about 24% compared to the 2002 level, and we expect profitability for the second year in a row. ÊOur sales and marketing efforts have paid off, resulting in a number of new clients, and we’ve been successful in growing our revenues with our current client base. ÊAll these activities put World in a strong position as we prepare for 2004.”

The new debentures will be convertible into common stock at a price of $3.20 per share and will not be callable for one year. The new debentures may be called by the company at 100 percent of principal amount after one year if the company's common stock closes at a price equal to or greater than 200 percent of the conversion price for 20 of 30 consecutive trading days and after two years if the common stock closes for a similar period at a price equal to or greater than 150 percent of the conversion price. After three years, the company may call the new debentures, at any time, at 100 percent of the principal amount regardless of stock price.

The new debentures have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The company has agreed to register the new debentures for resale following the closing of the issuance.

The closing is subject to various conditions including stockholder approval, concurrent funding of the ATSB guaranteed loan, termination of the loan facility with Wells Fargo Foothill, Inc., and the call for redemption of the remaining outstanding existing debentures.

The company received conditional approval from the Air Transportation Stabilization Board (ATSB) on April 23, 2003 for a federal loan guarantee of $27 million, representing 90 percent of a new $30 million term loan facility. The loan guarantee application that the company filed with the ATSB proposed that the company would restructure the existing debentures in a manner satisfactory to the ATSB. The ATSB approval is subject to a number of conditions, including the satisfaction of all the terms and conditions proposed in the company’s application.

The company's goal is to complete the debenture restructuring, receive final ATSB approval and close the ATSB guaranteed loan by the middle of December. Upon the closing of the issuance of the new debentures and the ATSB guaranteed loan, the company intends to call the entire remaining principal amount of existing debentures. Pursuant to the redemption provisions of the indenture governing the existing debentures, the redemption price of the remaining existing debentures will be 101.143 percent of their principal amount.

The company also announced that the special meeting of stockholders to approve the issuance of Êthe new debentures and the issuance of warrants to the ATSB in connection with the ATSB guaranteed loan has been set for December 15, 2003 and the record date for such meeting is November 12.

ÊUtilizing a well-maintained fleet of international range, widebody aircraft, World Airways has an enviable record of safety, reliability and customer service spanning more than 55 years. ÊThe company is a U.S. certificated air carrier providing customized transportation services for major international passenger and cargo carriers, the United States military and international leisure tour operators. ÊRecognized for its modern aircraft, flexibility and ability to provide superior service, World Airways meets the needs of businesses and governments around the globe. ÊFor more information, visit the company’s website at www.worldairways.com

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