Delta exchange offer expires, volume lower than goal

<p>Delta Air Lines Inc. announced Wednesday that its offer to exchange unsecured notes for secured bonds fell short of a company goal, but that enough investors had tendered their short-term securities for a debt exchange to occur.</p><p>The embattled airline said just over $607 million of unsecured debt had been tendered for exchange by the time the offer expired Tuesday. Its goal had been $680 million in new notes to the holders of $2.6 billion of unsecured debt.</p><p>News that some of the debt would be exchanged sent shares up 43 cents, or 6.6 percent, to close at $6.96 Wednesday on the New York Stock Exchange.</p><p>"It's not a surprise," said Ray Neidl, an airline industry analyst with Calyon Securities Inc. in New York. "I think Delta's in adequate shape for the next nine months to try to solve their other problems."</p><p>A Delta spokeswoman said the company would have no comment other than a press release announcing the results.</p><p>Delta said it will issue an unspecified amount of new secured notes in exchange for $256.8 million in aggregate principal in short-term securities.</p><p>Holders tendered $87.2 million in intermediate-term and $263.5 million in long-term securities, but totals didn't meet minimum tender conditions, forcing the airline to rescind its offer.</p><p>The offer was initially made Sept. 19 and expected to close Oct. 14, but Delta extended it several times, ultimately until Tuesday.</p><p>The Atlanta-based airline is trying to avoid bankruptcy. The secured notes would be redeemed more easily if the company entered bankruptcy; the unsecured bonds would likely be under water.</p><p>On Sept. 19, Delta said the new notes will be secured by collateral such as some unencumbered aircraft, flight simulators and flight training equipment. The collateral set aside for the intermediate and long-term securities will be used to secure alternative financing, the company said Wednesday.</p><p>"It's definitely not a slam dunk," Neidl said. "A lot of work still has to be done."</p>