Continental Airlines (NYSE: CAL) today
announced that the initial public offering of 30,000,000 shares of common
stock of its wholly owned subsidiary, ExpressJet Holdings, Inc.
(ExpressJet), was priced at $16.00 per share. Closing of the offering is
expected to occur on April 23, 2002, subject to customary closing
conditions. ExpressJet indirectly owns ExpressJet Airlines, Inc., the
regional airline that operates as Continental Express.
In the initial public offering, ExpressJet expects to sell
10,000,000 shares of its common stock and use the estimated net proceeds to
ExpressJet of $147 million to repay a portion of its indebtedness to
Continental Airlines. In addition, Continental Airlines expects to sell
20,000,000 of its shares of ExpressJet common stock in the offering and has
granted the underwriters an option to purchase an additional 4,500,000
shares to cover over-allotments. Continental Airlines intends to use $150
million of the $300 million of estimated net proceeds to Continental
Airlines ($367 million if the entire over-allotment option is exercised) to
fund a portion of its obligations to the Continental pension plan for
its employees, and to use the remainder of the proceeds for general corporate
purposes.
Following the offering, Continental Airlines' ownership of
ExpressJet will fall to 53.1 percent, or further if the underwriters
exercise their over-allotment option, down to 46.1 percent if the entire
over-allotment option is exercised. Continental Airlines currently does not
intend to remain a stockholder of ExpressJet over the long term. Following
the expiration of the 180-day lock-up period that it has agreed to in
connection with the offering, Continental Airlines will likely sell some
or all of its shares of ExpressJet common stock, subject to market conditions.
Continental Airlines is the fifth largest airline in the
U.S., offering more than 2,100 departures daily to 120 domestic and 91
international destinations. Operating hubs in New York, Houston, Cleveland and
Guam, Continental serves more international cities than any other U.S. carrier,
including extensive service throughout the Americas, Europe and Asia.
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