Holders of the series a 55 debentures may convert

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Holders of the Series A 5.5% Debentures may convert them into shares of our common stock at any time at a conversion rate of220.6288 shares per $1,000 principal amount of Series A 5.5% Debenture. Holders of the Series B 5.5% Debentures may convertthem into shares of our common stock at any time at a conversion rate of 225.2252 shares per $1,000 principal amount of Series B5.5% Debenture. The conversion rates are subject to adjustment should we declare common stock dividends or effect any commonstock splits or similar transactions. If the holders convert the 5.5% Debentures in connection with any fundamental corporate changethat occurs prior to October 15, 2013 for the Series A 5.5% Debentures or October 15, 2015 for the Series B 5.5% Debentures, theapplicable conversion rate may be increased depending upon our then current common stock price. The maximum number of sharesof common stock into which all of the 5.5% Debentures are convertible, including pursuant to this make-whole fundamental changeprovision, is 54.4 million shares. Holders who convert their 5.5% Debentures prior to April 15, 2011 will receive, in addition to thenumber of shares of our common stock calculated at the applicable conversion rate, a cash payment from the escrow account for the5.5% Debentures of the series converted equal to the sum of the remaining interest payments that would have been due on or beforeApril 15, 2011 in respect of the converted 5.5% Debentures.We may redeem any of the 5.5% Debentures for cash at a redemption price of 100% of their principal amount, plus accrued andunpaid interest at any time on or after October 15, 2013 for the Series A 5.5% Debentures and October 15, 2015 for the Series B5.5% Debentures. Holders may require us to repurchase the 5.5% Debentures for cash at a repurchase price equal to 100% of theirprincipal amount plus accrued and unpaid interest, if any, on October 15, 2013, 2018, 2023, 2028, and 2033 for the Series A5.5% Debentures and October 15, 2015, 2020, 2025, 2030, and 2035 for the Series B 5.5% Debentures; or at any time prior to theirmaturity upon the occurrence of a specified designated event.On June 4, 2008, in conjunction with the public offering of the 5.5% Debentures described above, we also entered into a sharelending agreement with Morgan Stanley & Co. Incorporated, an affiliate of the underwriter of the offering, or the share borrower,pursuant to which we loaned the share borrower approximately 44.9 million shares of our common stock. Under the share lendingagreement, the share borrower is required to return the borrowed shares when the debentures are no longer outstanding. We did notreceive any proceeds from the sale of the borrowed shares by the share borrower, but we did receive a nominal lending fee of $0.01per share from the share borrower for the use of borrowed shares.We evaluated the various embedded derivatives within the supplemental indenture for bifurcation from the 5.5% Debentures underthe applicable provisions of the Codification. Based upon our detailed assessment, we concluded these embedded derivatives were

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Term
Spring
Professor
CoryChamberlain
Tags
Delta Air Lines

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