Sun Country seeks loan from a Petters company
- Article by: LIZ FEDOR
- Star Tribune
- November 25, 2008 - 8:48 PM
Sun Country Airlines, in a motion filed Tuesday in U.S. Bankruptcy Court, is seeking court approval to obtain short-term financing from a Petters Aviation company to help the carrier pay its bills until next spring.
Tom Petters, who remains in jail on fraud charges unrelated to the airline, owns all of the voting shares in Sun Country, which filed for bankruptcy on Oct. 6.
Michael Meyer, Sun Country's bankruptcy attorney, said the airline wants U.S. Bankruptcy Judge Robert Kressel to permit Sun Country to get a loan from Elite Landings, a Petters company that had been marketing Airbus corporate jets.
Elite Landings, which also is in bankruptcy, canceled some purchases of Airbus aircraft and the court filing said that Airbus returned about $9.5 million to Elite.
Meyer said Sun Country must make payments to its two aircraft leasing companies by Dec. 5 or risk having its aircraft repossessed.
In addition, Meyer said that Sun Country wants the loan money to "restore our employee wages to what they were on the date we filed" for bankruptcy. Sun Country employees are now being paid about 70 percent of their wages, but CEO Stan Gadek has pledged to reimburse them next year.
The first quarter is usually Sun Country's best financial quarter because of the busy winter flying season. If Sun Country secures a loan from Elite, Meyer estimated that Sun Country would repay it by April. The amount of the loan and interest rate have not been disclosed publicly.
If it fails to win approval for the Elite loan, Sun Country would have to pursue a revolving line of credit from Minnesota Hometown Airline Financing, whose backers are unknown, at an 18 percent annual interest rate.
At the time of the Chapter 11 filing, Sun Country had $108.2 million in total liabilities, but Meyer said that figure included $32.3 million in sold tickets.
Raymond James and Associates, an investment banking firm, has been working on financing options for Sun Country. But at this stage, Meyer said, "they haven't been shopping the company for sale."
Liz Fedor • 612-673-7709
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