By RTT News, October 01, 2013, 07:45:00 AM EDT
(RTTNews.com) - Republic Airways Holdings Inc. ( RJET ) Tuesday announced that it has entered into a definitive agreement to sell its unit Frontier Airlines Holdings, Inc. to an affiliate of Indigo Partners LLC in an all-cash transaction valued at approximately $145 million.
Of the total consideration, $36 million will be paid in cash for the equity of Frontier Holdings, subject to certain adjustments under the purchase agreement, and the balance is indebtedness that will be retained by Frontier. In addition, Indigo plans to invest additional funds directly in Frontier after the closing.
As part of the deal, under a separate agreement, Republic will assign to Frontier all of Republic's rights under agreements relating to the Republic's Airbus A320neo order in exchange for reimbursement of pre-delivery deposits, which total $32 million.
The company said the completion of the deal is conditioned on agreements being reached with the Association of Flight Attendants and FAPAInvest LLC by no later than October 31. The transaction is also subject to receipt of required approvals and other customary closing conditions.
Assuming satisfaction of the conditions of the agreement, Republic expects the transaction to close in December 2013.
Republic Airways Chairman, President and Chief Executive Officer Bryan Bedford said, "This transaction is a direct result of Frontier's successful restructuring, continued cost reduction efforts and laser focus on revenue generation. I am confident that Frontier will enjoy future growth as Indigo continues the process to position the airline as a leading ultra-low-cost carrier in the United States."
In the deal, Barclays is serving as financial advisor and Hughes Hubbard & Reed LLP is serving as legal advisor to Republic.
Latham & Watkins LLP is serving as Indigo Partners LLC's legal advisor.
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