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Spirit Airlines has rejected a merger proposal from Frontier Airlines, calling the offer "woefully insufficient financially." The proposal, made on January 7, included $400 million in take-back debt and 19% of Frontier Airlines shares to Spirit's debtholders, amounting to at least $2.1 billion. However, Spirit's management found the terms inadequate.
Frontier assumed that Spirit’s creditors would complete a $350 million rights offering to retire debtor-in-possession financing after emerging from Chapter 11 bankruptcy. Excess liquidity was expected to bolster the combined entity's balance sheet.
Ted Christie, CEO of Spirit Airlines, and McIntyre Gardner, chairman of the board, highlighted previous discussions where Frontier offered more favorable terms: $580 million in take-back debt and 26.5% equity. They expressed dissatisfaction with Frontier's failure to address core issues like the drawn $300 million revolving credit facility.
