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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 15, 2000
CONTINENTAL AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-09781 74-2099724
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1600 Smith, HQSEO, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 324-2950
(Registrant's telephone number, including area code)
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Item 5. Other Events.
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On November 15, 2000, Continental Airlines, Inc. ("Continental")
executed various agreements (the "Northwest Agreements") with Northwest
Airlines, Inc. and certain of its affiliates ("Northwest") under which
Continental will, among other things, repurchase most of the Class A common
stock of Continental (which has ten votes per share) owned by Northwest,
reclassify the remaining shares of Class A common stock into Class B common
stock of Continental (which has one vote per share), make other adjustments to
Continental's corporate and alliance relationship with Northwest and issue to
Northwest a share of Preferred Stock with certain blocking rights as described
below (collectively, the "Northwest Transaction"). Under the Northwest
Agreements, Continental and Northwest have agreed to support an adjournment of
United States of America v. Northwest Airlines Corp. and Continental Airlines,
Inc., Civil Action No. 98-74611, pending in the United States District Court for
the Eastern District of Michigan (the "DOJ lawsuit"), pending closing of the
Northwest Transaction and to seek dismissal of the DOJ litigation upon or
promptly after the closing. The Northwest Agreements will, among other matters,
effect the following:
Repurchase and Reclassification. Continental will repurchase
from Northwest 6,685,279 shares of Class A common stock for $450
million in cash (the "Repurchase"). Immediately thereafter, the
remaining 1,975,945 shares of Class A common stock held by Northwest
(as well as all other outstanding shares of Class A common stock of
Continental) will be reclassified into 2,608,247 shares of Class B
common stock of Continental at an exchange ratio of 1.32 shares of
Class B common stock per share of Class A common stock as part of the
reclassification described below (the "Reclassification").
Northwest Alliance. The existing alliance agreement between
Continental and Northwest (the "Northwest Alliance") will be amended to
extend its term through December 31, 2025 and to add additional
termination rights (principally related to changes of control of
Northwest or Continental involving third party major air carriers and
certain other changes of control, as defined in the Preferred Stock and
described below, and to certain redemptions of the Preferred Stock).
Preferred Stock. In connection with the amendment to the
Northwest Alliance, Continental will issue Northwest one share of a new
series of preferred stock (the "Preferred Stock") for a nominal price.
The Preferred Stock will give Northwest the right to block, during the
term of the Alliance Agreement or, if earlier, until the Preferred
Stock becomes redeemable, (i) certain business combinations and similar
change of control transactions involving Continental and a third party
major air carrier with respect to which the stockholders of Continental
are entitled to vote, (ii) certain amendments to Continental's rights
plan (or certain redemptions of rights thereunder), (iii) any dividend
or distribution of all or substantially all of Continental's airline
assets, and (iv) certain reorganizations and restructuring transactions
involving Continental. The Preferred Stock will be redeemable by
Continental at a nominal price (and the blocking rights eliminated) (i)
if Northwest transfers or encumbers the Preferred Stock, (ii) if there
is a change of control of Northwest as defined in the Preferred Stock,
unless previously consented to by Continental, (iii) on expiration or
termination of the Northwest Alliance (other than as a result of a
breach by Continental), or (iv) if Northwest materially breaches its
standstill obligations (referred to below) to Continental or triggers
Continental's rights agreement.
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Change of Control. Under the terms of the Preferred Stock, a
change of control of Continental or Northwest means, among other
things, (i) a merger, reorganization, consolidation, business
combination or similar transaction with a third party major air
carrier, the acquisition by a third party major air carrier of 25% or
more of the relevant carrier's capital stock or voting power, or the
acquisition by the relevant carrier of 25% or more of the capital stock
or voting power of a third party major air carrier, (ii) the
liquidation or dissolution of Continental or Northwest, (iii) the sale,
transfer or other disposition of all or substantially all of the
relevant carrier's airline assets to a third party major air carrier,
(iv) the sale, transfer or other disposition of all or substantially
all of Continental's transatlantic or Latin American route network, or
Northwest's transpacific route network, (v) the acquisition by a third
party major air carrier of 25% or more of the capital stock or voting
power of the relevant carrier, (vi) the acquisition by the relevant
carrier of airline assets and associated employees, which airline
assets would have on a pro forma basis annual passenger revenues of
more than $1 billion, or (vii) the execution by the relevant carrier of
bona fide definitive agreements with respect to any of the foregoing.
The Preferred Stock also provides that commercial cooperation
agreements, including certain code sharing agreements and joint
ventures, will not constitute a change of control of the relevant
carrier under certain circumstances.
Standstill Agreement. Continental and Northwest have entered
into a standstill agreement that contains standstill and conduct
restrictions substantially similar to those currently contained in the
corporate governance agreement between the parties, except the
percentage of Continental equity permitted to be owned by Northwest
will be adjusted downward to reflect its holdings following the
Repurchase and Reclassification and any subsequent dispositions by
Northwest of Continental common stock, subject to adjustment upward
thereafter if the number of shares of Continental's common stock
outstanding decreases.
Rights Agreement. Continental's rights agreement will be
amended to take into account the effects of the Reclassification and
the Repurchase, and to eliminate Northwest as an "Exempt Person."
Charter Amendment. At a special meeting of Continental
stockholders, the charter of Continental will be amended, effective
immediately following the Repurchase, to (i) reclassify the Class A
common stock pursuant to the Reclassification, (ii) eliminate all
references to Class A and Class D common stock, (iii) eliminate the
special rights of a Northwest affiliate that currently owns Class A
common stock, and (iv) provide that until the Preferred Stock becomes
redeemable, Continental will not, without the consent of Northwest,
amend its rights agreement or redeem the rights thereunder unless such
amendment or redemption does not permit a third party major air carrier
to enter into a particular transaction without becoming an "Acquiring
Person" in such transaction where, but for such amendment or
redemption, such air carrier would have otherwise become an Acquiring
Person under the rights agreement.
Governance Agreement and Supplemental Agreement. The corporate
governance agreement between the parties and the related supplemental
agreement will each be terminated at the closing of the transactions.
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In connection with the execution of the Northwest Agreements,
Continental has agreed to purchase and terminate at closing the "rights of offer
and re-offer" of 1992 Air, Inc. covering the Continental common stock owned by
Northwest for $10 million in cash (or, at Continental's election, $11 million of
Class B common stock, valued on a 20-day trailing average basis).
Continental will call a special meeting of stockholders to vote on the
Reclassification and related charter amendments. Under the Northwest Agreements,
Northwest will vote its shares of Class A common stock for each of these
proposals, and Northwest has sufficient votes to ensure that they are approved.
Consummation of the Northwest Transaction is subject to certain closing
conditions, including review of the alliance agreement amendment by the
Department of Transportation. The parties currently anticipate closing the
Northwest Transaction in approximately two months.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
99.1 Press release dated November 15, 2000
99.2 Omnibus Agreement dated as of November 15, 2000 among the
Company, Northwest Airlines Corporation, Northwest
Airlines Holdings Corporation, Northwest Airlines, Inc.
and Air Partners, L.P.
99.3 Amended and Restated Certificate of Incorporation of Company
99.4 Certificate of Designations of Series B Preferred Stock
99.5 Termination of Northwest Airlines/Air Partners Voting Trust
dated as of November 15, 2000 among the Company and Northwest
Airlines Corporation
99.6 Termination of Amended and Restated Governance Agreement dated
as of November 15, 2000 among the Company, Northwest Airlines
Corporation and Northwest Airlines Holdings Corporation
99.7 Termination of Supplemental Agreement dated as of November 15,
2000 among the Company, Northwest Airlines Corporation and
Northwest Airlines Holdings Corporation
99.8 Standstill Agreement dated as of November 15, 2000 among the
Company, Northwest Airlines Holdings Corporation, Northwest
Airlines Corporation and Northwest Airlines, Inc.
99.9 Amendment to Amended and Restated Registration Rights
Agreement dated as of November 15, 2000 among the Company, Air
Partners, L.P., and Northwest Airlines Corporation
99.10 Reoffer Purchase Agreement dated as of November 15, 2000 among
the Company, 1992 Air, Inc., Northwest Airlines Corporation,
Northwest Airlines Holdings Corporation, and Air Partners,
L.P.
99.11 Amended and Restated Rights Agreement dated as of November 15,
2000 between the Company and ChaseMellon Shareholder Services,
LLC
99.12 Irrevocable Instruction Pursuant to Voting Trust Agreement
99.13 Form of Transfer Restriction Agreement
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Continental Airlines, Inc. has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CONTINENTAL AIRLINES, INC.
By /s/ Jeffery A. Smisek
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Jeffery A. Smisek
Executive Vice President and
General Counsel
November 15, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
99.1 Press release dated November 15, 2000
99.2 Omnibus Agreement dated as of November 15, 2000 among the
Company, Northwest Airlines Corporation, Northwest Airlines
Holdings Corporation, Northwest Airlines, Inc. and Air
Partners, L.P.
99.3 Amended and Restated Certificate of Incorporation of Company
99.4 Certificate of Designations of Series B Preferred Stock
99.5 Termination of Northwest Airlines/Air Partners Voting Trust
dated as of November 15, 2000 among the Company and Northwest
Airlines Corporation
99.6 Termination of Amended and Restated Governance Agreement dated
as of November 15, 2000 among the Company, Northwest Airlines
Corporation and Northwest Airlines Holdings Corporation
99.7 Termination of Supplemental Agreement dated as of November 15,
2000 among the Company, Northwest Airlines Corporation and
Northwest Airlines Holdings Corporation
99.8 Standstill Agreement dated as of November 15, 2000 among the
Company, Northwest Airlines Holdings Corporation, Northwest
Airlines Corporation and Northwest Airlines, Inc.
99.9 Amendment to Amended and Restated Registration Rights
Agreement dated as of November 15, 2000 among the Company, Air
Partners, L.P., and Northwest Airlines Corporation
99.10 Reoffer Purchase Agreement dated as of November 15, 2000 among
the Company, 1992 Air, Inc., Northwest Airlines Corporation,
Northwest Airlines Holdings Corporation, and Air Partners,
L.P.
99.11 Amended and Restated Rights Agreement dated as of November 15,
2000 between the Company and ChaseMellon Shareholder Services,
LLC
99.12 Irrevocable Instruction Pursuant to Voting Trust Agreement
99.13 Form of Transfer Restriction Agreement
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