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2/20/2003

Frontier details terms of loan

The Associated Press

DENVER — Frontier Airlines has until June 30, 2007, to pay back its $70 million loan, according to a regulatory filing Wednesday.

The Denver-based airline closed the loan on Friday, supported by a $63 million guarantee from the Air Transportation Stabilization Board.

Two other parties each guaranteed $3.15 million.

The low-fare carrier, which is in the middle of updating its fleet, has said the loan money would help it weather a market in which other sources of cash have dried up.

Financial terms of the loan stipulate that the company’s cash cannot fall below $25 million through Sept. 30, 2004, or $75 million thereafter. Frontier said it had $29.5 million in cash as of Dec. 31.

It would pay off its loan with quarterly installments of about $2.6 million, with a final payment of $33 million, it said in a document filed with the Securities and Exchange Commission.

The loan was provided by WestLB AG and Wells Fargo Bank. The blended implicit interest rate at closing was 6.58 percent.

Frontier said in its filing that the ATSB has received warrants to buy 3.45 million shares Frontier stock, and the other guarantors received warrants to buy 191,697 shares at $6 per share.

Shares were trading at $4.43, up 10 cents, midday Wednesday on the Nasdaq Stock Market.

Executives planned a conference call Friday to discuss the loan.