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Badly hurt following the Sept. 11 attacks, Arlington, Va.-based US Airways Group Inc. sought reorganization under Chapter 11 of the bankruptcy code Sunday. The company made its filing at the U.S. Bankruptcy Court for the Eastern District of Virginia, in Alexandria. It listed assets of about $7.81 billion and liabilities of about $7.83 billion. Judge Robert G. Mayer was scheduled to hear first-day motions at 10:30 a.m. Monday. US Airways has secured commitments for $500 million in debtor-in-possession (DIP) financing from a group of institutions led by Credit Suisse First Boston and Bank of America Corp., with participation by the private equity firm Texas Pacific Group. US Airways expects to emerge from Chapter 11 in the first quarter of 2003. “US Airways will continue to operate while we complete our financial restructuring, and our customers should be confident that we will continue service to the more than 200 communities in our network,” said its president and CEO, David Siegel, in a statement. Texas Pacific, hoping to duplicate the success it had in the early ’90s when it turned Continental Airlines Inc. around, has entered into a memorandum of understanding to provide a $200 million investment when US Airways emerges from Chapter 11 protection. In exchange, Texas Pacific would receive a 38 percent stake. It would also receive five seats on US Airways’ 13-member board. In late July, Texas Pacific and two other private equity firms agreed to buy Burger King Corp. from Britain’s Diageo PLC for $2.26 billion. Also accompanying US Airways’ emergence from bankruptcy would be a $1 billion collateralized loan backed by a federal guarantee conditionally approved by the Air Transportation Stabilization Board (ATSB). “We look forward to finalizing our arrangements so that, together with the ATSB financing, our capital and industry experience can contribute to the company’s prompt emergence and long-term prosperity,” said Richard P. Schifter, a partner at Texas Pacific, in a statement. US Airways was hard hit by the aftermath of Sept. 11. The prolonged closure of Washington Reagan National Airport, higher security costs, the economic recession and the cutback in travel along the East Coast all contributed significantly to its financial losses. Advising US Airways in its restructuring are Banc of America Securities LLC, which is the investment banking arm of Bank of America, and Seabury Group LLC, a Cos Cob, Conn., investment banking boutique. Skadden, Arps, Slate, Meagher & Flom is providing US Airways with legal advice. Texas Pacific is getting legal advice from its long-term law firm, Cleary, Gottlieb, Steen & Hamilton. The Cleary legal team includes the partners Michael Ryan, Filip Moerman and Michael Gerstenzang, as well as the associates Jennifer Brown, Sang Jin Han and Joanna Levine. In addition, Yaron Reich, a partner, and Rachel Kleinberg, an associate, are providing tax advice. Brian Leitch, a partner at Arnold & Porter, is serving as special bankruptcy counsel to Texas Pacific. Copyright �2002 TDD, LLC. All rights reserved.

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