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 MINNEAPOLIS, March 30 /PRNewswire/ -- The final operating documents

of the Northwest Airlines Financing were signed over the weekend, the Metropolitan Airports Commission (MAC) Chairman Hugh Schilling announced this morning.
 Gov. Carlson flew to Duluth, Minn., Friday, March 27, at noon, where the State of Minnesota and the various government entities involved in the northern base projects, along with Northwest Airlines signed the essential documents pertaining to the construction of the northern maintenance facilities. This cleared the way for MAC and Northwest to complete the signing of documents for the $315 million financing for Northwest.
 The MAC/NWA documents were signed late Sunday evening, in the Minneapolis law offices of MAC attorneys, Oppenheimer, Wolff and Donnelly, with Schilling signing for the Airports Commission, and Assistant Treasurer Douglas Hultberg signing for Northwest.
 These signings culminate a long negotiation process involving the legislature, the office of the governor, the Minnesota Department of Trade and Economic Development, the cities and airport commissions of Duluth and Hibbing/Chisholm, St. Louis County, the Iron Range Resources and Rehabilitation Board, the Metropolitan Airports Commission and Northwest Airlines.
 The financing includes $270 million taxable general obligation bonds issued by MAC and a $45 million direct loan from MAC's construction fund to set up a 27-month payment reserve and pay for the cost of issuing the bonds. The financing for the maintenance facilities in Duluth and Hibbing involves $350 million in various forms of financing. The northern Minnesota facilities are expected to generate 1,500 new jobs over the next 5-7 years.
 Northwest has pledged $476.3 million collateral against the MAC financing, and collateral of at least 125 percent of the state guaranteed loan for the northern facilities.
 Schilling indicated that the current financial benefits to the community in terms of 84,000 direct and indirect jobs, $2.6 billion injected into the regional economy, and more than $200 million in state and local taxes, are directly related to the continued presence and operation of Northwest Airlines and its hub, and he feels that this financing will assist Northwest to grow, prosper and continue to be a positive economic factor in the economy of the entire state. DETAILS OF BONDS TO BE ISSUED, COLLATERAL PLEDGED, MORTGAGES. GUARANTEES
 The financing package for Northwest consists of two separate parts, with MAC the principal source of the $315 million financing, and the State of Minnesota the principal source of financing for the maintenance facilities. Although the two financings are linked, MAC does not participate in the facility financing package.
 For the MAC/Northwest financing:
 -- $270 million in taxable General Obligation Bonds -- paid by Northwest lease payments, secured by collateral of 145 percent of the amount.
 -- $45 million loaned by MAC to NWA for cost of issuance, and to fund the debt service reserve, to be secured by collateral of 145 percent.
 For the Duluth A-320 Maintenance Base:
 -- $64.8 million Mortgage Bonds issued by the State of Minnesota, repaid by Northwest lease payments, secured by the facility as collateral.
 -- $125 million in State of Minnesota General Obligation Bonds repaid by Northwest lease payments, secured by collateral and State Property Tax pledge.
 -- $12.6 million in State of Minnesota Bonds paid by Northwest lease payments, secured by collateral and St. Louis County property tax pledge.
 -- $47.6 million in City of Duluth Bonds paid by various city revenue sources. No Northwest payments and no other guarantees.
 For Engine Overhaul Base in Hibbing, Minn. -- $100 million financing:
 -- Mortgage Bonds paid by Northwest lease payments, secured by facility as collateral.
 -- State of Minnesota General Obligation Bonds paid by Northwest lease payments.
 -- State Bonds paid by Northwest lease payments, secured by 125 percent collateral and St. Louis County property tax pledge.
 Additional incentives:
 In addition to the financing arrangements, a package of incentives has been provided by the State of Minnesota, to be paid based upon performance goals by Northwest Airlines, related to the Maintenance and Engine Overhaul facilities.
 -- Grants of $10 million from the Iron Range Resources and Rehabilitation Board and up to $10 million from the City of Hibbing, City of Chisholm and County of St. Louis which will be applied to the first 18 months of Northwest lease payments on the facility.
 -- A Minnesota corporate income tax credit of $5,000 per year for each of five years for all full-time jobs created within a five-year window. This incentive has a potential value of $25 million.
 -- Materials, equipment and supplies used or consumed in constructing the facilities are exempt from Minnesota sales and use taxes. This incentive has a potential value of $6 million.
 -- A letter of credit from IRRRB and Minnesota Power and Light (MPL) totalling $15 million for use as additional security on NWA bonds to generate the final $50 million of financing.
 Covenants by Northwest:
 MAC has also negotiated additional covenants from Northwest including an agreement that Northwest will maintain its corporate headquarters in Minnesota at least for the term of the bonds (30 years), that any reduction in employment in Minnesota should be proportionate to reduction throughout its system, and that it will contractually agree to night curfew prohibition of scheduled stage 2 aircraft from 11 p.m. to 6 a.m., which they are now complying with on a voluntary basis, as well as other noise abatement provisions.
 Collateral pledged by Northwest:
 The terms agreed upon by the negotiators provide for collateral initially at 151 percent of the amount of the financing, no less than 145 percent at any time unless Northwest's senior debt attains an investment grade rating, in which case the value could be lowered to 135 percent. The collateral consists of the Northwest Pilot Training Facility (NATCO), a package of international routes (the Boston package), Stage 2 and Stage 3 aircraft engine parts, real estate consisting of buildings F, the Sun Country hangar at MSP, and certain leasehold improvements. The collateral is detailed as follows:
 NATCO $196.9 million
 International Routes 209.5 million
 Parts 50.9 million
 Airport Facilities 19.0 million
 TOTAL $476.3 million
 -0- 3/30/92
 /CONTACT: J. Robert Stassen of MAC, 612-726-8169/ CO: Metropolitan Airports Commission; Northwest Airlines ST: Minnesota IN: AIR SU: JVN

KH -- MN007 -- 2967 03/30/92 14:47 EST
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Publication:PR Newswire
Date:Mar 30, 1992

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