Sun, Aug 03, 2003
ExpressJet Holdings: The Market Just Isn't Right
Blame the downturn in
commercial aviation. Blame the terrorists. Blame the war. For
whatever reason, Continental Airlines has terminated its recently
announced offer to sell 5 million shares of common stock in
ExpressJet.
Continental Will No Longer Be Majority Shareholder
In a separate release, ExpressJet announced
that it has priced its 144A private offering of $125 million
aggregate principal amount of convertible notes, the proceeds of
which will be used by ExpressJet to repurchase approximately $122
million of ExpressJet common stock from Continental Airlines. With
the repurchase of shares by ExpressJet, Continental Airlines'
ownership of ExpressJet is expected to fall to approximately 45%
(or 44% if the initial purchasers of ExpressJet's convertible notes
exercise their option to purchase additional notes).
Jeff Misner, Continental's
chief financial officer, said in a statement that while his airline
still intends to liquidate its ExpressJet position, it is willing
to wait until the company's shares appreciate in value.
"With our cash balance at an all-time high, we
will wait for a more appropriate opportunity to reduce our stake
beyond the shares that we are selling to ExpressJet," Misner said.
"As we've said before, we do not intend to remain a stockholder of
ExpressJet over the long term."
ExpressJet Airlines, Air Transport World's 2003 Regional Airline
of the Year, operates as Continental Express, providing Continental
Airlines with all of its regional jet capacity at its New York,
Houston and Cleveland hubs.
ExpressJet serves 123 destinations in the US, Canada, Mexico and
the Caribbean, with more than 1,100 daily departures.
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