Chicago Express Airlines Inc.
November 18, 2005
Compass Advisers, LLP ("Compass") acted as investment banker to ATA Holdings Corp. ("ATA") during its Chapter 11 reorganization to negotiate the sale of the assets, stock and/or business operations of ATA's regional airline, Chicago Express Airlines Inc. ("CEA"), including assets owned by ATA and utilized in the operations of CEA. Compass was concurrently providing financial advisory services to the Official Committee of Unsecured Creditors (the "Creditors Committee") of ATA during these bankruptcy proceedings, but it was deemed that Compass would best advance the interests of the Creditors Committee, as well as help preserve value for creditors of the bankrupt estate, by also directly assisting ATA with this sale transaction.
At the time of its bankruptcy petition, ATA operated a publicly-traded air transportation company (formerly American Trans Air) based in Indianapolis, Indiana. ATA's business consisted of a scheduled passenger service segment operating principally out of a hub at Midway Airport in Chicago, Illinois (then the second largest carrier operating at Midway), a military charter business transporting troops for the United States government, and a third segment transporting passengers between the Western U.S. mainland and Hawaii. J. George Mikelsons, the founder and chief executive officer of ATA at the time, owned approximately 70% of its common equity.
ATA was running out of cash and had decided that a quick sale of valuable assets was the best way to salvage its company. Within three months of the inception of the bankruptcy, ATA had determined it would be necessary to cease operations of CEA. ATA planned to sell CEA as a going concern, but only if it did not interfere with their proposed timetable to cease operations. Ultimately, ATA completely ceased CEA flight operations on March 28, 2005, two days before a scheduled auction for the sale of CEA.
As ATA's investment banker, Compass reviewed, analyzed and valued the complex financial and other issues regarding the estates in order to properly advise ATA and their Board of Directors on such issues, and to provide ATA and ATA's counsel with the analytical support that was necessary. Compass provided due diligence assistance, identified more than 300 potential purchasers and marketed the assets to these entities, and developed and managed the entire sale process and auction. The auction was conducted on March 31, 2005, but the winner later declined to proceed with the transaction and withdrew its bid. Compass immediately contacted the second highest bidder at the auction as well as other potential purchasers. The negotiations were quickly completed, and the Court approved the transfer and assignment of CEA and certain of its assets to CSC Investment Group Inc. for a total of $1,250,000, with the sale closing on June 21, 2005.
Following the sale of CEA, Compass continued to negotiate with CSC Investment Group Inc. regarding the sale of an engine owned by CEA and two SAAB aircraft owned by ATA, but previously used in the operations of CEA. The sale of these additional assets was not closed at the same time as the initial transaction, due to complications with respect to claims against the engine and the terms of sale of the two SAAB aircraft owned by ATA. Negotiations over the remaining assets dragged on for some time, with numerous revisions to certain terms and details of the proposed transaction, each requiring Court approval. On November 18, 2005 the sale of the additional assets to a joint venture between CSC Investment Group Inc. and Colgan Air Inc. was closed for a total of $2,350,000.
Compass' efforts as ATA's investment banker provided the company with a much-needed cash infusion to keep the business in operation during its Chapter 11 proceedings. Compass was in a unique position to simultaneously assist both the creditors and debtors in these cases, helping ATA achieve its short-term goal to quickly sell valuable assets, while also making certain the creditors' interests were preserved by maximizing the value of the company. Compass continued to provide financial advisory services to the creditors until ATA exited Chapter 11 on February 28, 2006.