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METRO AIRLINES, INC. FILES PLAN OF REORGANIZATION

 METRO AIRLINES, INC. FILES PLAN OF REORGANIZATION
 DALLAS, May 15 /PRNewswire/ -- Metro Airlines, Inc. (OTC: MAIRC) and


the Official Committee of Unsecured Creditors have filed a proposed joint plan of reorganization for Metro and its wholly-owned subsidiaries, Metroflight, Inc. and Metro Leasing, Inc., in the United States Bankruptcy Court for the Northern District of Texas.
 Under the proposed plan, reorganized Metro will be centered around Metroflight's current operations as American Eagle, a regional airline carrier in affiliation with American Airlines at Dallas/Fort Worth International Airport. The plan contemplates that 51 percent of the capital stock of the reorganized Metro will be issued, as a new Series A common stock, to the current holders of Metro's existing common stock and 44 percent will be issued, as a new Series B common stock, to the existing unsecured creditors of the parent corporation. The remaining 5 percent of the capital stock will be Series B common stock reserved for possible future issuance to management. The proposed plan prohibits certain persons from transferring their common stock for a period of three years from the effective date of the plan. Metroflight and Metro Leasing will remain as 100 percent owned subsidiaries of Metro.
 The board of directors of reorganized Metro will have nine members, four elected by holders of the new Series A common stock and four elected by holders of the new Series B common stock. Three of the directors, elected by the new Series B common stock, will be nominated by the current holders of Metro's 8-1/2 percent convertible subordinated debentures and one director will be nominated by the general unsecured creditors of Metro. The ninth member of the board will be selected by the director nominees of the Series A common stockholders from a slate of nominees proposed by a committee of all of the unsecured creditors of Metro.
 In addition to receiving stock, the unsecured creditors of Metro will receive promissory notes of Metro equal to the full amount of their claims, bearing interest at 7.63 percent per annum, payable 15 years from the date of their issue. Metro's principal bank lender will receive a note for the full face value of its claim, bearing interest fixed at its prime rate of interest on the date of issuance of the note, payable over 8 years. The unsecured creditors of Metroflight may elect either payment in cash for one-half of their claims or smaller initial cash payments and promissory notes from Metroflight for the full amounts of their claims. These notes would bear interest fixed at a prime rate on the date of issuance of the notes, payable in 72 consecutive monthly payments.
 The proposed plan is subject to certain contingencies, including approval by the Bankruptcy Court of Metroflight's assumption of certain agreements between Metroflight and American Airlines. If the Bankruptcy Court does not approve Metroflight's assumption of the agreements between Metroflight and American, the proposed plan may not be confirmed.
 Metro and Metroflight contend that the agreements with American provide, among other things, for an extension from November 1992 until November 2002 of the period that Metroflight is to serve as the exclusive "American Eagle" carrier at Dallas/Fort Worth Airport. As previously announced, American has filed a declaratory judgment action in the Bankruptcy Court requesting a ruling that certain agreements, which were executed by American after lengthy negotiations, are unenforceable. Metro and Metroflight have asserted affirmation defenses to American's request for a declaratory judgment, and they have also asserted counterclaims against American.
 The proposed plan of reorganization specifically provides for the funding of the litigation with American by Metro and Metroflight, and for management of the litigation in conjunction with the creditors of Metro. If the creditors determine to settle the litigation in a manner that involves a disposition or cessation of Metroflight's operations, the reorganization plan provides an option for certain holders of the Series A common stock of Metro to purchase the notes issued in the reorganization to Metro's unsecured creditors and receive any settlement distributions those note holders would have received. If the option is not exercised, holders of the Series A common stock in those circumstances would be entitled, to the extent settlement distributions are sufficient after payment of senior obligations, to receive $0.35 per share before distributions to holders of the notes issued in the reorganization to Metro's unsecured creditors.
 J. L. Seaborn, president of Metro, and Barbara J. Houser, counsel for the Official Committee of Unsecured Creditors, stated, "We are pleased to have reached this agreement and to take this important step toward Metro and its subsidiaries emerging from Chapter 11. This plan is the result of long and complex negotiations over the course of the last year, and we are hopeful that we can now move forward rapidly toward its confirmation."
 -0- 5/15/92
 /CONTACT: J. L. Seaborn, president of Metro Airlines, 214-453-4400, or Larry Howell of Howell Communications, Inc., 214-340-9994 for Metro Airlines/
 (MAIRC) CO: Metro Airlines Inc. ST: Texas IN: AIR SU: RCN


AH -- NY059 -- 0743 05/15/92 12:21 EDT
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Publication:PR Newswire
Date:May 15, 1992
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