AMR put these questions and answers on its investor relations page. We put it here unedited.
AMR COMMON STOCK Q&As
Important note: The brief answers below are provided for informational purposes only and are not intended to be a substitute for a careful review of the relevant documents, which include the merger agreement and support and settlement agreement which were filed by AMR Corporation with the Securities and Exchange Commission (the “SEC”) as exhibits on Form 8-K/A on February 14, 2013. Documents referenced in this Q&A that we have filed with the SEC are available free of charge at www.sec.gov and on www.aa.com. The brief summaries below are qualified in their entirety by reference to the documents that the company has filed with the SEC and the documents the company expects to file with the SEC in the future, including the combined registration statement and proxy statement of AMR Corporation and US Airways Group, Inc. on Form S-4, and the company’s plan of reorganization to be filed with the U.S. Bankruptcy Court for the Southern District of New York. You are strongly encouraged to consult legal counsel to assist in determining the impact of these filings on your personal circumstances.
1. I currently own shares of AMR (Symbol: AAMRQ). What will be the effect of the merger on my shares?
It is too early in the merger process for us to say with certainty whether the merger will close or, if it does, what distributions will be made to holders of common stock of AMR Corporation (AAMRQ). Some of our creditors have agreed, subject to certain conditions (the “support and settlement agreement”), to support a plan of reorganization for us that provides for holders of AMR equity interests (including common stock, warrants, restricted stock units and options) to receive shares in the merged company representing 3.5% of the total number of shares of the merged company’s common stock, subject to customary dilution, and potentially to receive additional shares of common stock of the merged company under certain circumstances. The support and settlement agreement is subject to a number of conditions and contingencies and we cannot provide assurance that the common stock distributions described above will actually be made. We encourage you to review our filings with the Securities and Exchange Commission on Form 8-K and Form 8-K/A made on February 14, 2013 that include the merger agreement and the support and settlement agreement.
2. Will my AMR common stock (Symbol:AAMRQ) be cancelled when the company emerges from Chapter 11?
The merger agreement provides that the existing AMR common stock will be cancelled when the merger occurs and we emerge from Chapter 11. If, in connection with the merger and the Chapter 11 plan proposed pursuant to the merger agreement, holders of existing AMR equity interests are entitled to receive a distribution on account of such equity interests, that distribution will be in the form of common stock of the merged company. At this time, we cannot predict the treatment of the AMR common stock if the merger does not occur. It is too early in the merger process for us to say with certainty whether the merger will close or, if it does, what distributions will be made to holders of common stock of AMR Corporation (AAMRQ). Some of our creditors have agreed, subject to certain conditions (the “support and settlement agreement”), to support a plan of reorganization for us that provides for holders of AMR equity interests (including common stock, warrants, restricted stock units and options) to receive shares in the merged company representing 3.5% of the total number of shares of the merged company’s common stock, subject to customary dilution, and potentially to receive additional shares of the merged company’s common stock under certain circumstances. The support and settlement agreement is subject to a number of conditions and contingencies and we cannot provide assurance that the common stock distributions described above will actually be made. We encourage you to review our filings with the Securities and Exchange Commission on Form 8-K and Form 8-K/A made on February 14, 2013 that include the merger agreement and the support and settlement agreement.
3. Are holders of AMR common stock (Symbol:AAMRQ) considered “stakeholders” of the company?
When we refer to “stakeholders”, we mean those persons or entities that have an economic interest in the company based on its value, taking into account that, under the Bankruptcy Code, creditors are entitled to payment in full before holders of equity interests can participate in any recovery. Thus, whether holders of AMR common stock are considered stakeholders ultimately will depend on whether they will be entitled to receive any recovery pursuant to a plan of reorganization.
4. What is the mechanism by which AMR common stock (Symbol:AAMQR) could potentially receive more value than the 3.5% of the merged company’s common stock?
It is too early in the merger process for us to say with certainty whether the merger will close or, if it does, what distributions will be made to holders of common stock in AMR Corporation (AAMRQ). Some of our creditors have agreed, subject to certain conditions (the “support and settlement agreement”), to support a plan of reorganization for us that provides for holders of AMR equity interests (including common stock, warrants, restricted stock units and options) to receive shares in the merged company representing 3.5% of the total number of shares of the merged company’s common stock and potentially to receive additional shares of the merged company’s common stock under certain circumstances. Generally, this potential additional value would only be available if the holders of prepetition unsecured claims against us receive under the plan common stock of the merged company with a value that would satisfy their claims in full. The support and settlement agreement is subject to a number of conditions and contingencies and we cannot provide assurance that the common stock distributions described above will actually be made. We encourage you to review our filings with the Securities and Exchange Commission on Form 8-K and Form 8-K/A made on February 14, 2013 that include the merger agreement and the support and settlement agreement.
5. Are holders of AMR common stock (Symbol:AAMRQ) “creditors” for purposes of the merger agreement and Chapter 11?
Holders of AMR common stock are not “creditors” for purposes of the merger agreement or Chapter 11.
6. Do I need to do anything in order to receive a distribution in the merger?
As a stockholder of AMR, you do not need to take any action at this time to preserve any right you may have to a distribution if the merger occurs and AMR shareholders are to receive a distribution on account of their stockholdings. If the merger does occur, upon its effectiveness, your AMR common stock will automatically be cancelled without any action on your part. If a distribution to holders of AMR common stock is available as a result of the merger, you will receive instructions as to any steps you need to take to ensure that you receive the distribution.
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