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Published Saturday, September 30, 2000, in the Miami
Herald
Fine Air gets operating cash lifeline BY INA PAIVA CORDLE, icordle@herald.com Fine Air Services received tentative court approval Friday for enough cash to keep its planes in the air and to pay its employees, in a Chapter 11 bankruptcy reorganization scheduled to be fast-moving and completed by year-end. The privately owned Miami cargo carrier filed for bankruptcy protection late Wednesday, saying it would continue to operate its 125 weekly flights to Latin America and the Caribbean without interruption. Fine Air's filing, which includes subsidiary Arrow Air, listed $265.3 million in assets and $271.2 million in liabilities, with 2,600 unsecured creditors. Fine Air Chief Executive Barry Fine said Friday that after months of unsuccessful restructuring negotiations with the holders of its $199 million in senior notes, the company had no other option than to seek bankruptcy protection. Soaring fuel prices and an economic downturn in Latin America had caused the company to run out of operating funds, and key assets had been promised as collateral in June, after Fine Air missed a $9.4 million interest payment on its senior notes. The liens on the assets take 90 days to become final, and that date was fast approaching. ``We had to file [bankruptcy] to attempt to remove liens to obtain financing, so we could come out of Chapter 11 in a successful reorganization,'' Fine said, after an initial hearing Friday afternoon before Chief U.S. Bankruptcy Judge A. Jay Cristol. While Fine Air has placed a 20 cent per kilo fuel surcharge on southbound cargo, it was still left with about $12 million in unrecuperated fuel costs this year, Fine said. And since it was already assessing the highest surcharge in the market, it couldn't increase the fee further, he said. Neal McGarity, spokesman for UBS Warburg, which holds about $140 million of Fine Air's notes, declined comment on the negotiations, but said: ``Their problems really stem from difficult operating conditions in the market.'' Near the start of the three-hour hearing, Cristol set a timetable for a swift reorganization, scheduling Dec. 22 for a hearing to confirm a reorganization plan. He jokingly threatened to lock the company and its bondholders in a room -- or send them out on a DC-8 -- until they reached an agreement. ``When Congress passed Chapter 11,'' he said, ``that Chapter 11 was envisioned as a game called `Let's Make a Deal' -- as I understand it, a playing field for the parties to get together and negotiate a solution when there's only one pie and more people who want a piece of that pie than there are pieces.'' Cristol gave tentative approval, subject to a final Oct. 12 hearing, on an overall $55 million credit facility from Banc of America Commercial Finance Corp., giving Fine Air continued access to an existing $16 million revolving credit facility plus $5 million in new funds. Fine Air, which has a staff of 991, also was given approval to pay about $2 million in payroll expenses and to continue to pay essential vendors in its normal course of business. Before the bankruptcy filing, Fine Air had paid attorneys Greenberg Traurig a $200,000 retainer, and accountants Arthur Andersen a $100,000 retainer, by wire transfer. Fine said the company also plans to make its $750,000 June 2001 payment to the U.S. Attorneys Office, part of a $3.5 million criminal fine assessed this year, related to two felony charges for improper record keeping. Fine, who owns half the company with his father Frank Fine, said he expects Fine Air to emerge from bankruptcy stronger, with the bondholders taking an ownership stake. ``We'll have a reorganized company with a better balance sheet, reduced debt load, reduced interest payments and a change of some debt for equity,'' he said. ``It will make the company very viable.'' Copyright 2000 Miami Herald |