sctovi
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
CONTINENTAL AIRLINES, INC.
(Name of Subject Company and Filing Persons (Issuer))
5% Convertible Notes due 2023
(Title of Class of Securities)
210795PJ3
(CUSIP Numbers of Class of Securities)
Jennifer L. Vogel, Esq.
Senior Vice President, General Counsel,
Secretary and Chief Compliance Officer
1600 Smith Street
Department HQSLG
Houston, Texas 77002
(713) 324-5000
(Name, Address and Telephone Number of Person Authorized to Receive Notice and Communications on Behalf of Filing Person)
COPIES TO:
Kevin P. Lewis
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002-6760
(713) 758-2222
CALCULATION OF FILING FEE
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Transaction Valuation (*) |
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Amount of Filing Fee** |
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$174,950,000 |
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$ |
12,473.94 |
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* |
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Calculated solely for purposes of determining the filing fee. The purchase price of the 5%
Convertible Notes due 2023 (the Notes), as described herein, is $1,000 per $1,000 principal
amount of the Notes, plus accrued and unpaid interest to, but not including, the repurchase
date. As of May 14, 2010, there was $174,950,000 in aggregate principal amount of Notes
outstanding, resulting in an aggregate maximum purchase price of $174,950,000. |
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** |
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The amount of the filing fee was calculated in accordance with Rule 0-11(b) of the Securities
Exchange Act of 1934, as amended, and equals and equals $71.30 for each $1,000,000 of the
value of the transaction. |
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Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid: Not Applicable
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Filing Party: Not Applicable |
Form or Registration No.: Not Applicable
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Date Filed: Not Applicable |
o Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the statement relates:
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o third-party tender offer subject to Rule 14d-1. o going-private transaction subject to Rule 13e-3. |
þ issuer tender offer subject to Rule 13e-4. o amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting the results of the tender
offer: o
INTRODUCTORY STATEMENT
Pursuant to the terms of and subject to the conditions set forth in the Indenture, dated as of
June 10, 2003 (the Indenture), between Continental Airlines, Inc., a Delaware corporation
(Continental or the Company), and The Bank of New York Mellon Trust Company, N.A., as successor
to Bank One, N.A., as trustee (the Trustee), for the Companys 5% Convertible Notes due 2023 (the
Notes), this Tender Offer Statement on Schedule TO (Schedule TO) is filed by the Company with
respect to the right of each holder (each, a Holder) of the Notes to sell and the obligation of
the Company to repurchase the Notes, as set forth in the Company Notice to Holders of 5%
Convertible Notes due 2023, dated May 17, 2010 (the Company Notice), and the related notice
materials filed as exhibits to this Schedule TO (which Company Notice and related notice materials,
as amended or supplemented from time to time, collectively constitute the Option Documents).
This Schedule TO is intended to satisfy the disclosure requirements of Rules 13e-4(c)(2) and
13e 4(d)(1) under the Securities Exchange Act of 1934, as amended.
Items 1 through 9.
The Company is the issuer of the Notes and is obligated to purchase all of the Notes if
properly tendered by the holders under the terms and subject to the conditions set forth in the
Indenture and the Option Documents. The Notes are convertible into shares of Class B common stock,
$0.01 par value per share, of the Company, subject to the Companys right to pay cash in lieu of
Class B common stock for some or all of the Notes, and to the terms, conditions and adjustments
specified in the Indenture and the Notes. The Company maintains its principal executive offices at
1600 Smith Street, Dept. HQSEO, Houston, Texas 77002, and the telephone number there is (713)
324-5000. As permitted by General Instruction F to Schedule TO, all of the information set forth
in the Option Documents is incorporated by reference into this Schedule TO.
Item 10. Financial Statements.
(a) Pursuant to Instruction 2 to Item 10 of Schedule TO, the Company believes that its
financial condition is not material to a Holders decision whether to put the Notes to the Company
because (i) the consideration being offered to holders of Notes consists solely of cash, (ii) the
offer is not subject to any financing conditions, (iii) the offer applies to all outstanding Notes
and (iv) the Company is a public reporting company that files reports electronically on EDGAR.
(b) Not applicable.
Item 11. Additional Information.
(a) Not applicable.
(b) Not applicable.
Item 12. Exhibits.
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Exhibit |
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Number |
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Description |
(a)(1)
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Company Notice to Holders of 5% Convertible Notes due 2023, dated May 17, 2010. |
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(a)(5)
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Press release issued on May 17, 2010. |
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(b)
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Not applicable. |
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(d)(1)
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Indenture, dated as of June 10, 2003, between the Company and the Trustee
(incorporated by reference to Exhibit 4.11 to the Companys Registration
Statement on Form S-3 filed on September 8, 2003). |
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(g)
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Not applicable. |
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(h)
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Not applicable. |
Item 13. Information Required by Schedule 13E-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this statement is true, complete and correct.
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Date: May 17, 2010 |
Continental Airlines, Inc.
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By: |
/s/ Jennifer L. Vogel
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Name: |
Jennifer L. Vogel |
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Title: |
Senior Vice President, General Counsel,
Secretary and Chief Compliance Officer |
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EXHIBIT INDEX
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Exhibit |
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Number |
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Description |
(a)(1)
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Company Notice to Holders of 5.0% Convertible Notes due 2023, dated May 17, 2010. |
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(a)(5)
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Press release issued on May 17, 2010. |
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(b)
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Not applicable. |
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(d)(1)
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Indenture, dated as of June 10, 2003, between the Company and the Trustee
(incorporated by reference to Exhibit 4.11 to the Companys Registration
Statement on Form S-3 filed on September 8, 2003). |
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(g)
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Not applicable. |
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(h)
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Not applicable. |
exv99waw1
Exhibit (a)(1)
COMPANY NOTICE
TO HOLDERS OF
5% CONVERTIBLE NOTES DUE 2023 ISSUED BY
CONTINENTAL AIRLINES, INC.
CUSIP Number: 210795PJ3
Reference is made to the Indenture, dated as of June 10, 2003 (the Indenture) between
Continental Airlines, Inc., a Delaware corporation (Continental or the Company) and The Bank of
New York Mellon Trust Company, N.A., as successor to Bank One, N.A., as trustee (the Trustee),
relating to the Companys 5% Convertible Notes due 2023 (the Notes). Pursuant to Section 3.08 of
the Indenture and paragraph 6 of the Notes, each holder (each, a Holder) of the Notes has an
option to require the Company to purchase all or a portion of its Notes, in accordance with the
terms, procedures and conditions outlined in the Indenture and the Notes, on June 15, 2010 (the
Repurchase Date).
NOTICE IS HEREBY GIVEN pursuant to the terms and conditions of the Indenture that, at the
option of each Holder (the Put Option), the Notes will be purchased by the Company for a purchase
price (the Repurchase Price) in cash equal to $1,000 per $1,000 principal amount of the Notes,
plus any accrued and unpaid interest to, but not including, the Repurchase Date, upon the terms and
subject to the conditions set forth in the Indenture, the Notes, this Company Notice and the
related notice materials, as amended and supplemented from time to time (collectively, the Option
Documents). Holders may surrender their Notes from May 17, 2010 through 5:00 p.m., New York City
time, on June 14, 2010 (the Expiration Date). In order to exercise the Put Option, a Holder must
follow the procedures contained in the Option Documents. This Company Notice is being sent
pursuant to Section 3.08 of the Indenture and the provisions of the Notes. All capitalized terms
used but not specifically defined herein shall have the meanings given to such terms in the
Indenture.
The Repurchase Date is an Interest Payment Date under the terms of the Indenture.
Accordingly, interest accrued up to the Repurchase Date will be paid to record holders as of the
Regular Record Date therefor, and we expect that there will be no accrued and unpaid interest due
as part of the Repurchase Price. The Regular Record Date for the Repurchase Date is June 1, 2010.
The Trustee has informed the Company that, as of the date of this Company Notice, all
custodians and beneficial holders of the Notes hold the Notes through The Depository Trust Company
(DTC) accounts and that there are no certificated Notes in non-global form. Accordingly, all
Notes surrendered for purchase hereunder must be delivered through the transmittal procedures of
DTCs Automated Tender Offer Program, subject to the terms and conditions of that system.
To exercise your option to have the Company purchase the Notes and to receive payment of the
Repurchase Price, you must validly deliver your Notes through DTCs transmittal procedures prior to
5:00 p.m., New York City time, on the Expiration Date. Notes surrendered for purchase may be
withdrawn by the Holders of such Notes at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. The right of Holders to surrender Notes for purchase pursuant to the Put Option
expires at 5:00 p.m., New York City time, on the Expiration Date.
The Paying Agent is The Bank of New York Mellon. The address of the Paying Agent is:
The Bank of New York Mellon
Corporate Trust Operations
101 Barclay Street 7 East
New York, NY 10286
Attention: Ms. Carolle Montreuil
Phone: 212-815-5920
Fax: 212-298-1915
Additional copies of this Company Notice may be obtained from the Paying Agent at its address set
forth above.
The date of this Company Notice is May 17, 2010.
TABLE OF CONTENTS
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1. Information Concerning the Company |
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4 |
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2. Information Concerning the Notes |
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2.1 The Companys Obligation to Purchase the Notes |
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2.2 Repurchase Price |
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2.3 Conversion Rights of the Notes |
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2.4 Market for the Notes and our Common Stock |
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5 |
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2.5 Optional Redemption |
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2.6 Holders Right to Require Purchase Upon a Repurchase Event |
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2.7 Ranking |
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3. Procedures to Be Followed by Holders Electing to Surrender Notes for Purchase |
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3.1 Method of Delivery |
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3.2 Agreement to be Bound by the Terms of the Put Option |
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3.3 Delivery of Notes. |
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4. Right of Withdrawal |
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5. Payment for Surrendered Notes |
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6. Notes Acquired |
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7. Plans or Proposals of the Company |
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8. Interests of Directors, Executive Officers and Affiliates of the Company in the Notes |
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9. Legal Matters; Regulatory Approvals |
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10. Purchases of Notes by the Company and Its Affiliates |
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11. Certain U.S. Federal Income Tax Consequences |
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11.1 U.S. Holders |
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11.2 Non-U.S. Holders |
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12. Additional Information |
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13. No Solicitations |
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14. Definitions |
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15. Conflicts |
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SCHEDULE A INFORMATION ABOUT THE EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY |
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A-1 |
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No person has been authorized to give any information or to make any representations other
than those contained in this Company Notice and, if given or made, such information or
representations must not be relied upon as having been authorized. This Company Notice does not
constitute an offer to buy or the solicitation of an offer to sell securities in any circumstances
or jurisdiction in which such offer or solicitation is unlawful. The delivery of this Company
Notice shall not, under any circumstances, create any implication that the information contained
herein is current as of any time subsequent to the date of such information. None of the Company,
its Board of Directors or its employees is making any representation or recommendation to any
Holder as to whether to exercise or refrain from exercising the Put Option. You should consult
your own financial and tax advisors and must make your own decision as to whether to exercise the
Put Option and, if so, the amount of Notes for which to exercise the Put Option.
We and our affiliates, including our executive officers and directors, will be prohibited by
Rule 13e-4(f)(6) and Rule 14e-5 under the Securities Exchange Act of 1934, as amended (the
Exchange Act), from purchasing any of the Notes outside of the Put Option for ten business days
after the expiration of the Put Option. Following that time, we expressly reserve the absolute
right, in our sole discretion from time to time in the future to redeem the Notes, in whole or in
part, and to purchase any of the Notes, whether or not any Notes are purchased by the Company
pursuant to the Put Option, through open market purchases, privately negotiated transactions,
tender offers, exchange offers or otherwise, upon such terms and at such prices as we may
determine, which may be more or less than the price to be paid pursuant to the Put Option and could
be for cash or other consideration. We cannot assure you as to which, if any, of these
alternatives, or a combination thereof, we will pursue.
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SUMMARY TERM SHEET
The following are answers to some of the questions that you may have about the Put Option. To
understand the Put Option fully and for a more detailed description of the terms of the Put Option,
we urge you to read carefully the remainder of this Company Notice because the information in this
summary is not complete and the remainder of this Company Notice contains additional important
information. We have included page references to direct you to a more detailed description of the
topics in this summary.
Who is obligated to purchase my Notes?
Continental Airlines, Inc., a Delaware corporation (Continental, the Company or we), is
obligated, at your option, to purchase its 5% Convertible Notes due 2023 (the Notes). (See Page
4)
Why are you obligated to purchase my Notes?
The right of each holder (each, a Holder) of the Notes to sell and our obligation to
purchase the Notes pursuant to the Put Option is a term of the Notes under the Indenture, dated as
of June 10, 2003 (the Indenture) between the Company and The Bank of New York Mellon Trust
Company, N.A., as successor to Bank One, N.A., as trustee (the Trustee) and has been a right of
Holders from the time the Notes were issued. We are required to repurchase the Notes of any Holder
exercising the Put Option pursuant to the terms of the Notes and the Indenture. (See Page 4)
What securities are you obligated to purchase?
We are obligated to purchase all of the Notes surrendered at the option of the Holder thereof.
As of May 14, 2010, there was $174,950,000 in aggregate principal amount of the Notes outstanding.
(See Page 4)
How much will you pay and what is the form of payment?
Pursuant to the terms of the Indenture and the Notes, we will pay, in cash, a purchase price
(the Repurchase Price) equal to $1,000 per $1,000 principal amount of the Notes, plus any accrued
and unpaid interest to, but not including, June 15, 2010 (the Repurchase Date), with respect to
any and all Notes validly surrendered for purchase and not withdrawn. The Repurchase Price is
based solely on the requirements of the Indenture and the Notes and bears no relationship to the
market price of the Notes or our Common Stock (as defined below). The Repurchase Date is an
Interest Payment Date under the terms of the Indenture. Accordingly, interest accrued to the
Repurchase Date will be paid to holders of record as of the Regular Record Date, as defined in the
Indenture, and we expect that there will be no accrued and unpaid interest due as part of the
Repurchase Price. (See Pages 4-5)
How can I determine the market value of the Notes?
There currently is a limited trading market for the Notes. To the extent that the Notes are
traded, prices of the Notes may fluctuate widely depending on such factors as trading volume, the
balance between buy and sell orders, prevailing interest rates, the market price of our Common
Stock, our operating results and the market for similar securities. Holders are urged to obtain
current market information for the Notes, to the extent available, and our Common Stock (as defined
below) before making any decision with respect to the Put Option. Our Class B common stock, $0.01
par value per share (Common Stock), into which the Notes are convertible, is listed on the New
York Stock Exchange (the NYSE) under the symbol CAL. On May 14, 2010, the closing sale price
of our Common Stock on the NYSE was $20.65 per share. (See Pages 5-6)
Is the Company making any recommendation about the Put Option?
None of the Company or its Board of Directors or employees is making any recommendation as to
whether you should exercise or refrain from exercising the Put Option. You must make your own
decision whether to exercise the Put Option and, if so, the amount of Notes for which to exercise
the Put Option. (See Page 5)
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When does the Put Option expire?
The Put Option expires at 5:00 p.m., New York City time, on June 14, 2010 (the Expiration
Date). We will not extend the period that Holders have to exercise the Put Option unless required
to do so by applicable law (including, but not limited to, the federal securities laws). (See Page
4)
What are the conditions to the Companys purchase of the Notes?
Provided that the Companys purchase of validly surrendered Notes is not unlawful, the
purchase will not be subject to any conditions other than satisfaction of the procedural
requirements described in this Company Notice. Delivery of Notes by book-entry transfer
electronically through the Automated Tender Offer Program (ATOP) of The Depository Trust Company
(DTC) is a condition to the payment of the Repurchase Price to the Holder of such Notes. (See
Pages 4 and 8)
How do I surrender my Notes?
To surrender your Notes for purchase pursuant to the Put Option, you must surrender the Notes
through the transmittal procedures of DTC on or before 5:00 p.m., New York City time, on the
Expiration Date.
Holders whose Notes are held by a broker, dealer, commercial bank, trust company or other
nominee must contact such nominee if such Holder desires to surrender such Holders Notes and
instruct such nominee to surrender the Notes on the Holders behalf through the transmittal
procedures of DTC on or before 5:00 p.m., New York City time, on the Expiration Date.
Holders who are DTC participants should surrender their Notes electronically through ATOP,
subject to the terms and procedures of that system, on or before 5:00 p.m., New York City time, on
the Expiration Date.
You bear the risk of untimely surrender of your Notes. You must allow sufficient time for
completion of the necessary DTC procedures before 5:00 p.m., New York City time, on the Expiration
Date. By surrendering your Notes through the transmittal procedures of DTC, you agree to be bound
by the terms of the Put Option set forth in this Company Notice. (See Pages 7-9)
If I exercise the Put Option, when will I receive payment for my Notes?
We will accept for payment all validly surrendered Notes promptly upon expiration of the Put
Option. We will, prior to 10:00 a.m., New York City time, on June 16, 2010, deposit with the
Paying Agent the appropriate amount of cash required to pay the Repurchase Price for the
surrendered Notes, and the Paying Agent will promptly distribute the cash to DTC, the sole record
Holder. DTC will thereafter distribute the cash to its participants in accordance with its
procedures. (See Pages 9-10)
Your delivery of the Notes by book-entry transfer electronically through DTCs ATOP system is
a condition to your receipt of the Repurchase Price for such Notes.
Can I withdraw previously surrendered Notes?
Yes. To withdraw previously surrendered Notes, you (or your broker, dealer, commercial bank,
trust company or other nominee) must comply with the withdrawal procedures of DTC in sufficient
time to allow DTC to withdraw your Notes prior to 5:00 p.m., New York City time, on the Expiration
Date.
You bear the risk of untimely withdrawal of previously surrendered Notes. You must allow
sufficient time for completion of the DTC procedures before 5:00 p.m., New York City time, on the
Expiration Date. (See Page 9)
Do I need to do anything if I do not wish to exercise the Put Option?
No. If you do not surrender your Notes before the expiration of the Put Option, we will not
purchase your Notes and such Notes will remain outstanding subject to their existing terms. (See
Page 5)
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If I choose to surrender my Notes for purchase, do I have to surrender all of my Notes?
No. You may surrender all of your Notes, a portion of your Notes or none of your Notes. If
you wish to surrender a portion of your Notes for purchase, however, you must surrender your Notes
in a principal amount of $1,000 or a multiple of $1,000. (See Page 5)
If I do not surrender my Notes for purchase, will I continue to be able to exercise my conversion
rights?
Yes. If you do not surrender your Notes for purchase, your conversion rights will not be
affected. You will continue to have the right to convert each $1,000 principal amount of the Notes
into shares of our Common Stock, subject to the terms, conditions and adjustments specified in the
Indenture and the Notes. (See Page 5)
If I am a U.S. resident for U.S. federal income tax purposes, will I have to pay taxes if I
surrender my Notes for purchase pursuant to the Put Option?
The receipt of cash in exchange for Notes pursuant to the Put Option will be a taxable
transaction for U.S. federal income tax purposes and you may recognize income, gain or loss. We
recommend that you consult with your tax advisor regarding the actual tax consequences to you.
(See Pages 11-13)
Who is the Paying Agent?
The Bank of New York Mellon is serving as Paying Agent in connection with the Put Option. Its
address and telephone and fax numbers are set forth on the front cover of this Company Notice.
Whom can I contact if I have questions about the Put Option?
Questions and requests for assistance in connection with the Put Option may be directed to the
Paying Agent at the address and telephone and fax numbers set forth on the front cover of this
Company Notice.
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IMPORTANT INFORMATION CONCERNING THE PUT OPTION
1. Information Concerning the Company. Continental Airlines, Inc., a Delaware corporation
(Continental or the Company), is obligated to purchase its 5% Convertible Notes due 2023 (the
Notes) that have been surrendered for purchase pursuant to the Put Option and not withdrawn. The
Notes are convertible into shares of Class B common stock, par value $0.01 per share (the Common
Stock), of the Company, subject to the terms, conditions and adjustments specified in the
Indenture and the Notes. The Company is both the filing person and the subject company.
Continental is a major U.S. air carrier engaged in the business of transporting passengers,
cargo and mail. Continental is the worlds fifth largest airline as measured by the number of
scheduled miles flown by revenue passengers in 2009. Including its wholly-owned subsidiary,
Continental Micronesia, Inc., and regional flights operated on its behalf under capacity purchase
agreements with other carriers, Continental operates more than 2,200 daily departures. As of March
31, 2010, Continental flew to 118 domestic and 125 international destinations and offered
additional connecting service through alliances with domestic and foreign carriers.
Our principal executive offices are located at 1600 Smith Street, Houston, Texas 77002 and our
main telephone number at that address is (713) 324-5000. Our website address is
www.continental.com. We have not incorporated by reference into this Company Notice the
information included on or linked from our website, and you should not consider it to be a part of
this Company Notice.
2. Information Concerning the Notes. On June 10, 2003, we issued $175,000,000 in aggregate
principal amount of the Notes. Cash interest accrues on the Notes at the rate of 5% per annum and
is payable semi-annually on June 15 and December 15 of each year (each, an Interest Payment Date)
to the person in whose name a Note is registered at the close of business on the preceding June 1
or December 1 (each, a Regular Record Date), as the case may be. The Notes mature on June 15,
2023. As of May 14, 2010, there was $174,950,000 in aggregate principal amount of the Notes
outstanding.
2.1 The Companys Obligation to Purchase the Notes. Pursuant to the terms of the Notes and
the Indenture, dated as of June 10, 2003 (the Indenture) between the Company and The Bank of New
York Mellon Trust Company, N.A., as successor to Bank One, N.A., as trustee (the Trustee), we are
obligated to purchase all of the Notes validly surrendered and not withdrawn, at the Holders
option (the Put Option), on June 15, 2010 (the Repurchase Date).
The Put Option will expire at 5:00 p.m., New York City time, on June 14, 2010 (the Expiration
Date). We will not extend the period that Holders have to exercise the Put Option unless required
to do so by applicable law (including, but not limited to, the federal securities laws).
The purchase by the Company of validly surrendered Notes is not subject to any conditions
other than that the Companys purchase is not unlawful and satisfaction of the procedural
requirements described in this Company Notice.
If any Notes remain outstanding following the expiration of the Put Option, the Company will
become obligated to purchase the Notes, at the option of the Holders, in whole or in part, on June
15, 2013 and June 15, 2018, in each case at a purchase price in cash equal to the principal amount
thereof plus accrued and unpaid interest, if any, to, but not including, the purchase date thereof.
2.2 Repurchase Price. Pursuant to terms of the Indenture and the Notes, the purchase price to
be paid by the Company for the Notes on the Repurchase Date is equal to $1,000 per $1,000 principal
amount of the Notes, plus any accrued and unpaid interest to, but not including, the Repurchase
Date (the Repurchase Price). The Repurchase Date is an Interest Payment Date under the terms of
the Indenture. Accordingly, interest accrued to the Repurchase Date will be paid to record holders
as of the Regular Record Date, and we expect that there will be no accrued and unpaid interest due
as part of the Repurchase Price. We have determined that the Purchase Price will be paid in cash
with respect to any and all Notes validly surrendered for purchase (and not thereafter withdrawn)
prior to 5:00 p.m., New York City time, on the Expiration Date. Notes surrendered for purchase
will be accepted only in principal amounts equal to $1,000 or a multiple of $1,000. Delivery of
the Notes by book-entry transfer to the
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account maintained by the Paying Agent with The Depository Trust Company (DTC) is a
condition to the payment of the Repurchase Price to the Holder of such Notes.
The Repurchase Price is based solely on the requirements of the Indenture and the Notes and
does not necessarily bear any relationship to the market price of the Notes or our Common Stock.
Thus, the Repurchase Price may be significantly higher or lower than the current market price of
the Notes. Holders of Notes are urged to obtain the best available information as to potential
current market prices of the Notes, to the extent available, and our Common Stock before making a
decision whether to surrender their Notes for purchase.
None of the Company or our Board of Directors or employees is making any recommendation to
Holders as to whether to exercise or refrain from exercising the Put Option. Each Holder must make
his or her own decision whether to exercise the Put Option and, if so, the principal amount of
Notes for which to exercise the Put Option based on such Holders assessment of the current market
value of the Notes and our Common Stock and other relevant factors.
We recommend that you also consult with your tax and financial advisors with respect to the
tax consequences of exercising the Put Option, including the applicability and effect of any U.S.
federal, state and local law and any non-U.S. tax consequences in light of your own particular
circumstances.
2.3 Conversion Rights of the Notes. The Notes are convertible into shares of our Common
Stock, subject to our right to pay cash in lieu of Common Stock for some or all of the Notes, in
accordance with and subject to the terms of the Indenture and the Notes. The conversion rate of
the Notes is 50 shares of Common Stock per $1,000 principal amount of the Notes. The Paying Agent
is currently acting as Conversion Agent for the Notes. The Conversion Agent can be contacted at
the address and telephone and fax numbers set forth on the front cover of this Company Notice.
Holders who do not surrender their Notes for purchase pursuant to the Put Option, or who
validly withdraw a surrender of their Notes in compliance with the withdrawal procedures described
in Section 4 of this Company Notice, will retain the right to convert their Notes into Common Stock
subject to the terms, conditions and adjustments specified in the Indenture and the Notes. If a
Holder validly surrenders his or her Notes for purchase pursuant to the Put Option and the Holder
subsequently wishes to convert such Notes pursuant to the Indenture, the Holder may not convert his
or her surrendered Notes unless such Holder validly withdraws the Notes in compliance with the
procedures described in Section 4 of this Company Notice.
2.4 Market for the Notes and our Common Stock. There currently is a limited trading market
for the Notes. To the extent that the Notes are traded, prices of the Notes may fluctuate widely
depending on such factors as trading volume, the balance between buy and sell orders, prevailing
interest rates, the market price of our Common Stock, our operating results and the market for
similar securities. A debt security with a smaller outstanding principal amount available for
trading (a smaller float) may command a lower price and trade with greater volatility than would
a comparable debt security with a larger float. Consequently, our purchase of the Notes, if any,
pursuant to the Put Option may reduce the float and may negatively affect the liquidity, market
value and price volatility of the Notes that remain outstanding following the Put Option.
Our Common Stock, into which the Notes are convertible, is listed on the New York Stock
Exchange under the symbol CAL. The following table shows, for the periods indicated, the high
and low sales prices per share of our Common Stock as reported by the NYSE:
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High |
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Low |
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2010: |
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Second Quarter (through May 14, 2010) |
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$ |
24.29 |
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$ |
16.29 |
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First Quarter |
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$ |
23.64 |
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$ |
16.82 |
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2009 |
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Fourth Quarter |
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$ |
18.75 |
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|
$ |
10.94 |
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Third Quarter |
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$ |
17.55 |
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|
$ |
8.76 |
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Second Quarter |
|
$ |
15.76 |
|
|
$ |
7.86 |
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First Quarter |
|
$ |
21.83 |
|
|
$ |
6.37 |
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2008: |
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|
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Fourth Quarter |
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$ |
20.89 |
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|
$ |
9.49 |
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Third Quarter |
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$ |
21.40 |
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|
$ |
5.91 |
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Second Quarter |
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$ |
23.42 |
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|
$ |
9.70 |
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First Quarter |
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$ |
31.25 |
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$ |
17.19 |
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5
On May 14, 2010, the closing sale price of our Common Stock, as reported by the NYSE, was
$20.65 per share. As of May 14, 2010, there were 139,840,003 shares of Common Stock
outstanding.
The Holders of Notes are not entitled to dividends. Upon conversion into Common Stock, the
Holders will be entitled to dividends, if any, paid to holders of Common Stock. The Company
historically has not paid dividends on its Common Stock.
We urge you to obtain current market information for the Notes, to the extent available, and
our Common Stock before making any decision whether to exercise or refrain from exercising the Put
Option.
2.5 Optional Redemption. Beginning on June 18, 2010, the Notes are redeemable for cash at our
option at any time, in whole or in part, at a redemption price equal to the principal amount of
Notes to be redeemed plus any accrued and unpaid interest to, but not including, the date fixed for
redemption, as provided for in the Indenture and the Notes. However, effective on the date of this
Company Notice, we and our affiliates, including our executive officers and directors, are
prohibited under applicable United States federal securities laws from purchasing or redeeming
Notes (or the right to purchase or redeem Notes) other than through the Put Option until at least
the tenth business day after the Repurchase Date. (See Page 10).
2.6 Holders Right to Require Purchase Upon a Repurchase Event. Each Holder may require us to
purchase all or any part of his or her Notes if there is a Repurchase Event (as defined in the
Indenture) at a purchase price in cash equal to the principal amount of Notes to be redeemed plus
any accrued and unpaid interest to, but not including, the purchase date.
2.7 Ranking. The Notes are our unsecured senior obligations and rank equal in right of
payment with all our other existing and future unsecured indebtedness and senior to any of our
subordinated indebtedness. The Notes are effectively subordinated to all existing and future
secured debt of Continental, to the extent of the security for such secured debt. The Notes are
not guaranteed by any of our subsidiaries and, accordingly, the Notes are effectively subordinated
to the indebtedness and other liabilities of our subsidiaries.
3. Procedures to Be Followed by Holders Electing to Surrender Notes for Purchase. Holders
will not be entitled to receive the Repurchase Price for their Notes unless they validly surrender
(and do not thereafter withdraw) the Notes on or before 5:00 p.m., New York City time, on the
Expiration Date. Only registered Holders are authorized to surrender their Notes for purchase.
Holders may surrender some or all of their Notes; however, any Notes surrendered must be in a
principal amount of $1,000 or a multiple of $1,000.
If Holders do not validly surrender their Notes on or before 5:00 p.m., New York City time, on
the Expiration Date or if they withdraw validly surrendered Notes before 5:00 p.m., New York City
time, on the Expiration Date, their Notes will not be purchased and will remain outstanding subject
to the existing terms of the Notes and the Indenture.
You will not be required to pay any commission to us, DTC or the Paying Agent in connection
with your Put Option. However, there may be commissions you need to pay your broker in connection
with the surrender of the Notes.
3.1 Method of Delivery. The Trustee has informed the Company that, as of the date of this
Company Notice, all custodians and beneficial holders of the Notes hold the Notes through DTC
accounts and that there are no certificated Notes in non-global form. Accordingly, all Notes
surrendered for purchase hereunder must be delivered through DTCs Automated Tender Offer Program
(ATOP), subject to the terms and conditions of that system.
This Company Notice constitutes the Companys notice of repurchase right described in the
Indenture and delivery of the Notes via ATOP will satisfy the Holders requirement for physical
delivery of a Repurchase Notice
6
as defined and described in the Indenture. Delivery of Notes, including delivery and
acceptance through ATOP, is at the election and risk of the person surrendering such Notes.
3.2 Agreement to be Bound by the Terms of the Put Option. By surrendering Notes through the
transmittal procedures of DTC, a Holder acknowledges and agrees as follows:
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such Notes shall be purchased as of the Repurchase Date pursuant to the terms and
conditions set forth in this Company Notice; |
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such Holder agrees to all of the terms of this Company Notice; |
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such Holder has received this Company Notice and acknowledges that this Company
Notice provides the notices required pursuant to the Indenture; |
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upon the terms and subject to the conditions set forth in this Company Notice, the
Indenture and the Notes, and effective upon the acceptance for payment thereof, such
Holder (i) irrevocably sells, assigns and transfers to the Company all right, title and
interest in and to all the Notes surrendered, (ii) waives any and all rights with
respect to the Notes (including, without limitation, any existing or past defaults and
their consequences), (iii) releases and discharges the Company and its directors,
officers, employees and affiliates from any and all claims such Holder may have now, or
may have in the future arising out of, or related to, the Notes that such Holder
surrenders for repurchase, including, without limitation, any claims that such Holder
is entitled to receive additional principal or interest payments with respect to the
Notes or to participate in any conversion, redemption or defeasance of the Notes that
such Holder surrenders for repurchase, and (iv) irrevocably constitutes and appoints
the Paying Agent as the true and lawful agent and attorney-in-fact of such Holder with
respect to any such surrendered Notes, with full power of substitution and
resubstitution (such power of attorney being deemed to be an irrevocable power coupled
with an interest) to (a) transfer ownership of such Notes on the account books
maintained by DTC, together with all necessary evidences of transfer and authenticity,
to the Company, (b) present such Notes for transfer on the relevant security register
and (c) receive all benefits or otherwise exercise all rights of beneficial ownership
of such Notes (except that the Paying Agent will have no rights to, or control over,
funds from the Company, except as agent for the Company, for the Repurchase Price of
any surrendered Notes that are purchased by the Company), all in accordance with the
terms set forth in this Company Notice; |
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such Holder represents and warrants that such Holder (i) owns the Notes surrendered
and is entitled to surrender such Notes and (ii) has full power and authority to
surrender, sell, assign and transfer the Notes surrendered hereby and that, when such
Notes are accepted for purchase and payment by the Company, the Company will acquire
good title thereto, free and clear of all liens, restrictions, charges and encumbrances
of any kind and not subject to any adverse claim or right; |
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such Holder agrees, upon request from the Company, to execute and deliver any
additional documents deemed by the Paying Agent or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Notes surrendered; |
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such Holder understands that all Notes properly surrendered for purchase (and not
thereafter withdrawn) prior to 5:00 p.m., New York City time, on the Expiration Date
will be purchased at the Repurchase Price, in cash, pursuant to the terms and
conditions of the Indenture, the Notes and the other Option Documents; |
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payment for Notes purchased pursuant to the Company Notice will be made by deposit
of the Repurchase Price for such Notes with the Paying Agent, which will act as agent
for surrendering Holders for the purpose of receiving payments from the Company and
transmitting such payments to such Holders; |
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surrenders of Notes may be withdrawn by written notice of withdrawal delivered
pursuant to the procedures set forth in this Company Notice at any time prior to 5:00
p.m., New York City time, on the Expiration Date; |
7
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all authority conferred or agreed to be conferred pursuant to the terms of the Put
Option hereby shall survive the death or incapacity of the Holder and every obligation
of the Holder and shall be binding upon the Holders heirs, personal representatives,
executors, administrators, successors, assigns, trustees in bankruptcy and other legal
representatives; |
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the delivery and surrender of the Notes is not effective, and the risk of loss of
the Notes does not pass to the Paying Agent, until receipt by the Paying Agent of any
and all evidences of authority and any other required documents in form satisfactory to
the Company; and |
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all questions as to the validity, form, eligibility (including time of receipt) and
acceptance for payment of any surrender of Notes pursuant to the procedures described
in this Company Notice and the form and validity (including time of receipt of notices
of withdrawal) of all documents will be determined by the Company, in its sole
discretion, which determination shall be final and binding on all parties. |
3.3 Delivery of Notes.
Notes Held Through a Custodian. A Holder whose Notes are held by a broker, dealer, commercial
bank, trust company or other nominee must contact such nominee if such Holder desires to surrender
his or her Notes and instruct such nominee to surrender the Notes for purchase on the Holders
behalf through the transmittal procedures of DTC as set forth below in Notes in Global Form on or
prior to 5:00 p.m., New York City time, on the Expiration Date.
Notes in Global Form. A Holder who is a DTC participant may elect to surrender to the Company
his or her beneficial interest in the Notes by:
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delivering to the Paying Agents account at DTC through DTCs book-entry system his
or her beneficial interest in the Notes on or prior to 5:00 p.m., New York City time,
on the Expiration Date; and |
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electronically transmitting his or her acceptance through DTCs ATOP system, subject
to the terms and procedures of that system, on or prior to 5:00 p.m., New York City
time, on the Expiration Date. Upon receipt of such Holders acceptance through ATOP,
DTC will edit and verify the acceptance and send an agents message to the Paying Agent
for its acceptance. The term agents message means a message transmitted by DTC to,
and received by, the Paying Agent, which states that DTC has received an express
acknowledgment from the participant in DTC described in that agents message, stating
the principal amount of Notes that have been surrendered by such participant under the
Put Option and that such participant has received and agrees to be bound by the terms
of the Put Option, including those set forth in Section 3.2 of this Company Notice. |
In surrendering through ATOP, the electronic instructions sent to DTC by the Holder (or by a
broker, dealer, commercial bank, trust company or other nominee on the Holders behalf), and
transmitted by DTC to the Paying Agent, will acknowledge, on behalf of DTC and the Holder, receipt
by the Holder of, and agreement to be bound by, the terms of the Put Option, including those set
forth in Section 3.2 of this Company Notice.
You bear the risk of untimely surrender of your Notes. You must allow sufficient time for
completion of the necessary DTC procedures before 5:00 p.m., New York City time, on the Expiration
Date.
Unless we default in making payment of the Repurchase Price, interest on Notes validly
surrendered for purchase will cease to accrue on and after the Repurchase Date, whether or not such
Notes are delivered to the Paying Agent, and immediately after the Repurchase Date all rights
(other than the right to receive the Repurchase Price upon delivery of the Notes) of the Holder of
such Notes will terminate.
4. Right of Withdrawal. Notes surrendered for purchase may be withdrawn at any time if
withdrawn in sufficient time to allow DTC to withdraw those Notes prior to 5:00 p.m., New York City
time, on the Expiration Date. In order to withdraw Notes, Holders (or such Holders broker,
dealer, commercial bank, trust company or other nominee) must comply with the withdrawal procedures
of DTC. This means a Holder must deliver, or cause to be delivered, a valid withdrawal request
through the ATOP system from the tendering DTC participant in
8
sufficient time to allow DTC to withdraw those Notes before 5:00 p.m., New York City time, on
the Expiration Date. The withdrawal notice must:
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specify the DTC Voluntary Offer Instruction Number, the name of the participant for
whose account such Notes were tendered and such participants account number at DTC to
be credited with the withdrawn Notes; |
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contain a description of the Notes to be withdrawn (including the principal amount
to be withdrawn); and |
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be submitted through the DTC ATOP system by such participant under the same name as
the participants name is listed in the original tender, or be accompanied by evidence
satisfactory to the Company that the person withdrawing the tender has succeeded to the
beneficial ownership of the Notes. |
We will determine all questions as to the validity, form and eligibility, including time of
receipt, of notices of withdrawal.
You bear the risk of untimely withdrawal of your Notes. You must allow sufficient time for
completion of the necessary DTC procedures before 5:00 p.m., New York City time, on the Expiration
Date.
Holders may withdraw any Notes previously delivered to the Paying Agent and not yet accepted
for payment after the expiration of 40 business days from the date of this Company Notice.
5. Payment for Surrendered Notes. We will, prior to 10:00 a.m., New York City time, on the
business day following the Repurchase Date, deposit with the Paying Agent the appropriate amount of
cash required to pay the Repurchase Price for the surrendered Notes, and the Paying Agent will
promptly thereafter cause the cash to be distributed to each record Holder that has validly
delivered its Notes (and not validly withdrawn such delivery) prior to 5:00 p.m., New York City
time, on the Expiration Date. Your delivery of the Notes by book-entry transfer electronically
through DTCs ATOP system is a condition to your receipt of the Repurchase Price for such Notes.
The total amount of funds required by us to purchase all of the Notes is $174,950,000
(assuming that all of the Notes are validly surrendered for purchase and accepted for payment). In
the event any Notes are surrendered and accepted for payment, we intend to use cash on hand to
purchase the Notes. We do not have any alternative financing plans.
6. Notes Acquired. Any Notes purchased by us pursuant to the Put Option will be canceled by
the Trustee, pursuant to the terms of the Indenture.
7. Plans or Proposals of the Company. On May 2, 2010, Continental, UAL Corporation, a
Delaware corporation (UAL), and JT Merger Sub Inc., a Delaware corporation and wholly-owned
subsidiary of UAL (Merger Sub), entered into an Agreement and Plan of Merger (the Merger
Agreement), providing for a merger of equals business combination of Continental and UAL. The
Merger Agreement provides that, upon the terms and subject to the conditions set forth in the
Merger Agreement, Merger Sub will be merged with and into Continental (the Merger), with
Continental continuing as the surviving corporation and as a wholly-owned subsidiary of UAL.
Subject to the terms and conditions of the Merger Agreement, which has been approved
unanimously by the boards of directors of the respective parties, if the Merger is completed, each
outstanding share of our Common Stock will be converted into the right to receive 1.05 shares of
UAL common stock (the United Common Stock), and Continental stock options, other equity awards
(other than profit-based restricted stock units that will be converted into a fixed amount in cash)
and convertible debt securities will be generally converted into stock options, equity awards and
convertible debt securities with respect to the United Common Stock, after giving effect to the
exchange ratio. It is expected that the Merger will qualify as a tax-free reorganization for U.S.
federal income tax purposes so that, in general, none of Continental, UAL, Merger Sub or any of the
Continental stockholders will recognize any gain or loss in the transaction, except that
Continental stockholders will recognize gain with respect to cash received in lieu of fractional
shares of the United Common Stock.
9
The Merger Agreement provides, among other things, that, upon consummation of the Merger, the
board of directors of the combined company will consist of 16 members, composed of (i) Jeffery A.
Smisek, Continentals current chief executive officer, (ii) Glenn F. Tilton, UALs current chief
executive officer, (iii) six independent directors from each of Continental and UAL, (iv) the UAL
director who is elected by the Air Line Pilots Association, International, the holder of the UAL
Class Pilot MEC Junior Preferred Stock, and (v) the UAL director who is elected by the
International Association of Machinists and Aerospace Workers, the holder of the UAL Class IAM
Junior Preferred Stock. Upon completion of the Merger, Mr. Tilton will serve as non-executive
chairman of the board of directors of the combined company and will serve in that capacity until
December 31, 2012 or two years after the date the Merger is consummated, whichever is later. Mr.
Smisek will serve as chief executive officer of the combined company, and upon the date Mr. Tilton
is no longer the non-executive chairman, Mr. Smisek will succeed to the chairmanship unless a
majority of the entire board of directors of the combined company accepts the recommendation of a
majority of the members of its entire Nominating/Governance Committee to take action otherwise.
Subject to applicable law, prior to the Merger, Messrs. Tilton and Smisek will engage in a planning
process for integration purposes, which will include the selection from the management ranks of
Continental and UAL, in an equitable and balanced manner, of those managers who will hold key
management positions at the combined company following the Merger. The combined company will have
its corporate headquarters in Chicago, Illinois and will maintain a significant presence in
Houston, Texas. Specific business functions to be located in Houston will be determined prior to
the Merger as part of the integration planning process.
Completion of the Merger is subject to certain conditions, including, among others: (i)
adoption of the Merger Agreement by Continentals stockholders, (ii) approval by UALs stockholders
of the issuance of the United Common Stock and the amendment of UALs certificate of incorporation
to, among other things, change UALs name to United Continental Holdings, Inc., (iii) the
expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, (iv) receipt of other material governmental consents and
approvals (both domestic and foreign) required to consummate the Merger, (v) the absence of any
material injunction or legal restraint prohibiting the consummation of the Merger, (vi) the
registration statement on Form S-4 used to register the United Common Stock to be issued as
consideration for the Merger having been declared effective by the Securities and Exchange
Commission (the SEC), (vii) the listing of the United Common Stock on the NYSE or NASDAQ having
been authorized and (viii) delivery of customary opinions from counsel to UAL and counsel to
Continental that the Merger will qualify as a tax-free reorganization for federal income tax
purposes. The obligation of each party to consummate the Merger is also conditioned upon the other
partys representations and warranties being true and correct, the other party having performed in
all material respects its obligations under the Merger Agreement and the other partys not having
suffered a material adverse effect. We can provide no assurance that the Merger will be
consummated at all or without significant delay. In the event that the Merger is completed, we may
not be able to successfully integrate our businesses or realize the expected synergies and other
benefits of the Merger.
The Merger Agreement contains certain termination rights for both Continental and UAL,
including if the Merger is not consummated on or before December 31, 2010 (which is subject to
extension under certain circumstances but generally not beyond September 30, 2011) and if the
approval of the stockholders of either Continental or UAL is not obtained. The Merger Agreement
further provides that, upon termination of the Merger Agreement under specified circumstances,
including termination of the Merger Agreement by Continental or UAL as a result of an adverse
change in the recommendation of the other partys board of directors, Continental may be required
to pay to UAL, or UAL may be required to pay to Continental, as applicable, a termination fee of
$175 million.
For more information regarding the Merger and Merger Agreement, please see our Current Report
on Form 8-K filed May 3, 2010.
Except as described above in these materials or in our filings with the SEC, we currently have
no plans which would be material to a Holders decision to exercise the Put Option, which relate to
or which would result in:
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any extraordinary transaction, such as a merger, reorganization or liquidation,
involving us or any of our subsidiaries; |
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any purchase, sale or transfer of a material amount of our assets or those of any of
our subsidiaries;
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10
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any material change in our present dividend rate or policy, indebtedness or
capitalization; |
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any change in our present board of directors or management, including, but not
limited to, any plans or proposals to change the number or the term of directors or to
fill any existing vacancies on our board of directors; |
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any other material change in our corporate structure or business; |
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any class of our equity securities to be delisted from a national securities
exchange or cease to be authorized to be quoted in an automated quotation system
operated by a national securities association; |
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any class of our equity securities becoming eligible for termination of registration
under Section 12(g)(4) of the Securities Exchange Act of 1934, as amended (the
Exchange Act); |
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the suspension of our obligation to file reports under Section 15(d) of the Exchange
Act; |
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the acquisition by any person of additional securities of ours, or the disposition
of our securities; or |
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any changes in our charter, bylaws or other governing instruments, or other actions
that could impede the acquisition of control of us. |
8. Interests of Directors, Executive Officers and Affiliates of the Company in the Notes.
Neither we nor, to our knowledge after making reasonable inquiry, any of our executive officers or
directors or any associate or subsidiary of any such person, has any beneficial interest in the
Notes, or has engaged in any transaction in the Notes during the 60 days preceding the date of this
Company Notice. A list of our executive officers and directors is attached to this Company Notice
as Schedule A. The term associate is used as defined in Rule 12b-2 under the Exchange Act.
Certain of our directors and executive officers are participants in ordinary course equity
compensation plans and arrangements involving our Common Stock, as disclosed by us prior to the
date hereof. Except as described in the previous sentence, neither we nor, to our knowledge after
making reasonable inquiry, any of our executive officers or directors, is a party to any contract,
arrangement, understanding or agreement with any other person relating, directly or indirectly, to
the Put Option or with respect to any of our securities, including, but not limited to, any
contract, arrangement, understanding or agreement concerning the transfer or the voting of our
securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies, consents or authorizations.
9. Legal Matters; Regulatory Approvals. We are not aware of any license or regulatory permit
that is material to our business that might be adversely affected by the Put Option, or of any
approval or other action by any government or regulatory authority or agency that is required for
the acquisition of the Notes as described in this Company Notice. Should any approval or other
action be required, we presently intend to seek the approval or take the action. However, we
cannot assure you that we would be able to obtain any required approval or take any other required
action.
10. Purchases of Notes by the Company and Its Affiliates. The Company made no purchases of
the Notes during the 60 days preceding the date of this Company Notice.
Effective on the date of this Company Notice, we and our affiliates, including our executive
officers and directors, are prohibited under applicable United States federal securities laws from
purchasing Notes (or the right to purchase Notes) other than through the Put Option until at least
the tenth business day after the Repurchase Date. Following such time, if any Notes remain
outstanding, we may exercise our right to redeem such Notes, in whole or in part, and we and our
affiliates may purchase Notes in the open market, in private transactions, through a subsequent
tender offer, or otherwise, any of which may be consummated at purchase prices higher or lower than
the Repurchase Price, or which may be paid in cash or other consideration. Any decision to
purchase Notes after the Repurchase Date, if any, will depend upon many factors, including the
market price of the Notes, the amount of Notes delivered for purchase pursuant to the Put Option,
the market price of our Common Stock, our business and financial position, and general economic and
market conditions. Any such purchase may be on the same terms or on
11
terms more or less favorable to the Holders of the Notes than the terms of the Put Option as
described in this Company Notice.
11. Certain U.S. Federal Income Tax Consequences.
TO ENSURE COMPLIANCE WITH IRS CIRCULAR 230, HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY
DISCUSSION OF FEDERAL TAX ISSUES IN THIS NOTICE IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND
CANNOT BE RELIED UPON, BY HOLDERS OF NOTES FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE
IMPOSED ON SUCH HOLDERS UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE); (B) SUCH
DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS
ADDRESSED HEREIN; AND (C) HOLDERS OF NOTES SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
The following is a discussion of certain U.S. federal income tax consequences that may be
relevant to U.S. Holders or Non-U.S. Holders (each as defined below) who surrender Notes for
purchase pursuant to the Put Option. For this purpose, a holder means a beneficial owner of a
Note; a U.S. Holder means a holder that, for U.S. federal income tax purposes, is (i) a citizen
or resident alien individual of the United States, (ii) a corporation (or other entity taxable as a
corporation for U.S. federal income tax purposes) created or organized in or under the laws of the
United States or any state thereof or the District of Columbia, (iii) an estate the income of which
is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if it either
(x) is subject to the primary supervision of a court within the United States and one or more
United States persons have the authority to control all substantial decisions of the trust or (y)
has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United
States person; and a Non-U.S. Holder means a holder that, for U.S. federal income tax purposes,
is an individual, corporation, estate or trust and, in each case, is not a U.S. Holder.
If an entity treated as a partnership for U.S. federal income tax purposes holds a Note, the
tax treatment of such partnership and each partner thereof will generally depend upon the status
and activities of the partnership and the partner. Any such entity or partner thereof should
consult its tax advisor regarding the U.S. federal income tax consequences applicable to it and its
partners of surrendering a Note for purchase pursuant to the Put Option.
This discussion deals only with Notes held as capital assets (generally, property held for
investment). This discussion does not address all of the U.S. federal income tax consequences that
may be relevant to a holder in light of its own particular circumstances, nor does it deal with
special situations, such as:
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holders who are subject to special tax treatment, such as dealers in securities or
currencies, banks, insurance companies, retirement plans, tax-exempt entities,
regulated investment companies, real estate investment trusts, U.S. Holders whose
functional currency is not the U.S. dollar, traders in securities that elect to use a
mark-to-market method of accounting, certain former citizens or residents of the United
States, foreign governmental entities, international organizations, controlled foreign
corporations and passive foreign investment companies; |
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Notes held as part of a hedging, integrated, constructive sale or conversion
transaction or a straddle; |
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any alternative minimum tax consequences; or |
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any state, local or non-U.S. tax consequences. |
This discussion is based upon the provisions of the Code, Treasury regulations, rulings, other
administrative guidance and judicial decisions, all as of the date hereof. Those authorities may
be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences
different from those discussed below.
WE RECOMMEND TO EACH HOLDER THAT INTENDS TO SURRENDER ANY NOTE FOR PURCHASE PURSUANT TO THE
PUT OPTION TO CONSULT ITS OWN TAX ADVISOR AS TO THE U.S. FEDERAL, STATE AND LOCAL, AND ANY NON-U.S.
TAX CONSEQUENCES TO IT IN LIGHT OF ITS OWN PARTICULAR CIRCUMSTANCES.
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11.1 U.S. Holders
Surrender of Notes for Purchase. The surrender of any Note by a U.S. Holder for purchase
pursuant to the Put Option generally will be treated as a taxable sale of the Note for U.S. federal
income tax purposes. Such U.S. Holder generally will recognize gain or loss upon such sale equal
to the difference between (i) the cash received by such U.S. Holder in consideration for the
surrender of the Note and (ii) such U.S. Holders adjusted tax basis in the Note at the time of
sale. A U.S. Holders adjusted tax basis in a Note generally will be equal to the cost of the Note
to such U.S. Holder, increased by the amount of any market discount such U.S. Holder elected to
include in income with respect to the Note (as described below). A U.S. Holder that acquired a
Note at premium should consult his or her tax advisor regarding the U.S. federal income tax
consequences of surrendering the Note for purchase pursuant to the Put Option.
Any such gain or loss recognized generally will be capital gain or loss, subject to the market
discount rules described below. Capital gains of individuals and certain other non-corporate
taxpayers from the sale of capital assets held for more than one year at the time of sale generally
are eligible for a reduced tax rate. Limitations apply to the deduction of capital losses.
If a U.S. Holder acquired a Note at a market discount, any gain recognized by such U.S. Holder
from the surrender of such Note for purchase pursuant to the Put Option generally will be treated
as ordinary income, rather than capital gain, to the extent of the market discount which has not
previously been included in income by such U.S. Holder and is treated as having accrued on such
Note at the time of such purchase. Subject to a de minimis exception, the market discount on a
Note is the excess, if any, of the stated principal amount of the Note over the amount the U.S.
Holder paid for it. Generally, market discount would be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless the U.S. Holder
elected to accrue such market discount on a constant interest rate method. If a U.S. Holder
elected to include any market discount on a Note in income currently as it accrues, on either a
ratable or constant interest rate method, such U.S. Holders basis in the Note would be increased
to reflect the amount of income so included.
Information Reporting and Backup Withholding. In general, information reporting requirements
will apply to the amount paid to a U.S. Holder in consideration for the surrender of a Note for
purchase pursuant to the Put Option, unless such U.S. Holder is an exempt recipient (such as a
corporation). A U.S. Holder may also be subject to backup withholding on such payment unless the
U.S. Holder (i) provides a correct U.S. taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with the applicable requirements or (ii)
is a corporation or other exempt recipient and, if required, provides a certification to such
effect. Any amounts withheld under the backup withholding rules may be allowed as a refund or a
credit against a U.S. Holders U.S. federal income tax liability provided the required information
is furnished on a timely basis to the Internal Revenue Service (IRS).
11.2 Non-U.S. Holders
Surrender of Notes for Purchase. Subject to the discussion of backup withholding below, a
Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax on gain
recognized on the surrender of a Note for purchase pursuant to the Put Option unless:
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such Non-U.S. Holder is an individual who is present in the United States for 183
days or more in the taxable year of the tender and certain other conditions are met; |
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such gain is effectively connected with the conduct by the Non-U.S. Holder of a
trade or business in the United States, in which case such Non-U.S. Holder generally
will be subject to U.S. federal income tax on a net income basis in substantially the
same manner as a U.S. Holder (except as provided by an applicable income tax treaty)
and, if it is a corporation, may also be subject to a branch profits tax at the rate of
30% (or a lower rate if provided by an applicable income tax treaty); or |
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Continental is or has been a United States real property holding corporation
(USRPHC) for U.S. federal income tax purposes during the Non-U.S. Holders holding
period for the Notes and certain other conditions are met. |
13
Generally, a corporation is a USRPHC if the fair market value of its United States real
property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real
property interests and its other assets used or held for use in a trade or business (all as
determined for U.S. federal income tax purposes). Continental does not believe that it has been a
USRPHC for any year during which the Notes have been outstanding, nor does it presently anticipate
that it will be a USRPHC for the current year.
Information Reporting and Backup Withholding. Payments to a Non-U.S. Holder in consideration
for the surrender of the Notes for purchase pursuant to the Put Option made through a U.S. office
of a broker generally will be subject to information reporting and backup withholding unless the
payee certifies under penalties of perjury that it is not a U.S. person or otherwise establishes an
exemption. Any such payments made through a non-U.S. office of a U.S. broker or of a non-U.S.
broker with certain specified U.S. connections generally will be subject to information reporting,
but not backup withholding, unless the broker has evidence in its records that the payee is not a
U.S. person and has no knowledge or reason to know to the contrary.
Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit
against the Non-U.S. Holders U.S. federal income tax liability, if any, provided the required
information is furnished on a timely basis to the IRS.
12. Additional Information. This Company Notice is part of a Tender Offer Statement on
Schedule TO that we have filed with the SEC. This Company Notice does not contain all of the
information contained in the Schedule TO and the exhibits to the Schedule TO. We recommend that
you review the Schedule TO, including its exhibits, and the following materials that we have filed
with the SEC before making a decision as to whether to exercise or refrain from exercising the Put
Option:
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Filing |
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Date(s) Filed |
Annual Report on Form 10-K for the year ended December 31, 2009
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February 17, 2010 |
Quarterly Report on Form 10-Q for the quarter ended March 31, 2010
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April 22, 2010 |
Current Reports on Form 8-K
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January 4, 2010 |
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January 5, 2010 |
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January 21, 2010 |
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February 2, 2010 |
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March 2, 2010 |
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April 15, 2010 |
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May 3, 2010 |
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May 4, 2010 |
Definitive Proxy Statement.
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April 23, 2010 |
We also recommend that you review all documents filed by us with the SEC pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this Company Notice and
before 5:00 p.m., New York City time, on the Expiration Date. Notwithstanding the foregoing,
information furnished but not filed in any current report on Form 8-K, including the related
exhibits, is not deemed referenced herein.
The SEC file number for these Continental filings is 1-10323. These filings, our other
annual, quarterly and current reports, our proxy statements and our other SEC filings may be
examined, and copies may be obtained, at the SECs public reference room at 100 F Street N.E.,
Washington, D.C. 20549. You may obtain information on the operation of the public reference room
by calling the SEC at 1-800-SEC-0330. Our SEC filings also are available to the public on the
SECs Internet site at www.sec.gov.
Each person to whom a copy of this Company Notice is delivered may obtain a copy of any or all
of the documents to which we have referred you, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into such documents, at no cost, by writing us
at Continental Airlines, Inc., P.O. Box 4607, Houston, Texas 77210-4607, Attention: Secretary.
As you read the documents listed above, you may find some inconsistencies in information from
one document to another. If you find inconsistencies between the documents, or between a document
and this Company Notice, you should rely on the statements made in the most recent document.
14
In making your decision as to whether to exercise the Put Option, you should read the
information about us contained in this Company Notice together with the information contained in
the documents to which we have referred you.
13. No Solicitations. We have not employed or retained any persons to make solicitations or
recommendations in connection with the Put Option.
14. Definitions. All capitalized terms used but not specifically defined herein shall have
the meanings given to such terms in the Indenture or the Notes, as applicable.
15. Conflicts. In the event of any conflict between this Company Notice on the one hand and
the terms of the Indenture or any applicable laws on the other hand, the terms of the Indenture or
applicable laws, as the case may be, will control.
None of the Company or our Board of Directors or employees is making any recommendation to any
Holder as to whether to exercise or refrain from exercising the Put Option. Each Holder must make
his or her own decision whether to exercise the Put Option and, if so, the principal amount of
Notes for which to exercise the Put Option based on his or her own assessment of current market
value and other relevant factors.
CONTINENTAL AIRLINES, INC.
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SCHEDULE A
INFORMATION ABOUT THE EXECUTIVE OFFICERS
AND DIRECTORS OF THE COMPANY
The table below sets forth information about our executive officers and directors as of May
17, 2010. To the best of our knowledge after making reasonable inquiry, none of our executive
officers or directors has beneficial ownership in the Notes.
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Name |
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Position |
Kirbyjon H. Caldwell
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Director |
James E. Compton
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Executive Vice President and Chief Marketing Officer |
Carolyn Corvi
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Director |
Douglas H. McCorkindale
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Director |
Henry L. Meyer III
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Director |
Mark J. Moran
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Executive Vice President and Chief Operations Officer |
Oscar Munoz
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Director |
Zane C. Rowe
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Executive Vice President and Chief Financial Officer |
Laurence E. Simmons
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Director |
Jeffery A. Smisek
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Chairman of the Board, President and Chief Executive Officer |
Karen Hastie Williams
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Director |
Ronald B. Woodard
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Director |
Charles A. Yamarone
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Director |
The business address and telephone number of each executive officer and director is c/o Continental
Airlines, Inc., 1600 Smith Street, Houston, Texas 77002, (713) 324-5000.
A-1
exv99waw5
Exhibit (a)(5)
CONTINENTAL AIRLINES ANNOUNCES PUT OPTION
NOTIFICATION FOR 5% CONVERTIBLE NOTES DUE 2023
HOUSTON, May 17, 2010 Continental Airlines (NYSE: CAL) today announced that it is
notifying holders of the $174,950,000 outstanding principal amount of its 5% Convertible Notes due
2023 (the Notes) that they have an option, pursuant to the terms of the Notes, to require
Continental Airlines to purchase, on June 15, 2010, all or a portion of such holders Notes (the
Put Option) at a price equal to $1,000 per $1,000 principal amount of the Notes, plus any accrued
and unpaid interest to June 15, 2010. As June 15, 2010, is an interest payment date for the Notes,
interest accrued up to the purchase date will be paid to record holders as of the regular record
date immediately preceding this interest payment date, and therefore Continental Airlines expects
that there will be no accrued and unpaid interest due as part of the purchase price. Under the
terms of the Notes, Continental Airlines has the option to pay the purchase price for the Notes
with cash, stock, or a combination of cash and stock, and has elected to pay for the Notes solely
with cash.
As required by rules of the Securities and Exchange Commission, Continental Airlines will file a
Tender Offer Statement on Schedule TO later today. In addition, Continental Airlines company
notice to holders (a copy of which will be attached as an exhibit to such Schedule TO) with respect
to the Put Option specifying the terms, conditions and procedures for exercising the Put Option
will be available through The Depository Trust Company and the paying agent, which is The Bank of
New York Mellon. None of Continental Airlines, its board of directors, or its employees has made or
is making any representation or recommendation to any holder as to whether to exercise or refrain
from exercising the Put Option.
-more-
CONTINENTAL AIRLINES ANNOUNCES PUT OPTION NOTIFICATION FOR 5% CONVERTIBLE NOTES DUE 2023/Page2
Noteholders opportunity to exercise the Put Option will commence on May 17, 2010, and
will terminate at 5:00 p.m., New York City time, on June 14, 2010. Holders may withdraw any
previously delivered purchase notice pursuant to the terms of the Put Option at any time prior to
5:00 p.m., New York City time, on June 14, 2010.
The address of The Bank of New York Mellon is Corporate Trust Operations, 101 Barclay Street -
7 East, New York, NY 10286, Attention: Ms. Carolle Montreuil, Phone: 212-815-5920, Fax:
212-298-1915.
This press release is for informational purposes only and is not an offer to purchase, or the
solicitation of an offer to purchase, the Notes.
# # #