EXHIBIT 99.2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
IN RE: ss. Chapter 11
ss.
KITTY HAWK, INC., ss. CASE NO. 400-42141-BJH-11
KITTY HAWK AIRCARGO, INC., ss. CASE NO. 400-42142-BJH-11
KITTY HAWK CHARTERS, INC., ss. CASE NO. 400-42143-BJH-11
KITTY HAWK INTERNATIONAL, INC., ss. CASE NO. 400-42144-BJH-11
KITTY HAWK CARGO, INC., ss. CASE NO. 400-42145-BJH-11
OK TURBINES, INC., ss. CASE NO. 400-42146-BJH-11
LONGHORN SOLUTIONS, INC., ss. CASE NO. 400-42147-BJH-11
AIRCRAFT LEASING, INC., ss. CASE NO. 400-42148-BJH-11
AMERICAN INTERNATIONAL ss. CASE NO. 400-42149-BJH-11
TRAVEL, INC., AND ss.
FLIGHT ONE LOGISTICS, INC. ss. CASE NO. 400-42069-BJH-11
ss.
Debtors. ss. Jointly Administered under
ss. Case No. 400-42141
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SUPPLEMENTAL DISCLOSURE UNDER 11 U.S.C. SS. 1125
IN SUPPORT OF THE DEBTORS' AMENDED JOINT
PLAN OF REORGANIZATION DATED NOVEMBER 22, 2000
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THIS SUPPLEMENTAL DISCLOSURE HAS BEEN PREPARED BY THE DEBTORS IDENTIFIED ABOVE
(COLLECTIVELY, THE "DEBTORS," OR "KITTY HAWK") AND DESCRIBES THE AMENDMENTS TO
THE DEBTORS' JOINT PLAN OF REORGANIZATION DATED OCTOBER 10, 2000 (AS AMENDED,
THE "AMENDED PLAN"). ANY TERM USED IN THIS SUPPLEMENTAL DISCLOSURE THAT IS NOT
DEFINED HEREIN HAS THE MEANING ASCRIBED TO THAT TERM IN THE AMENDED PLAN. A COPY
OF THE AMENDED PLAN IS INCLUDED HEREIN BEHIND THE SUPPLEMENTAL DISCLOSURE.
Dated: November 22, 2000
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Robert D. Albergotti John D. Penn Sarah B. Foster
State Bar No. 00969800 State Bar No. 15752300 State Bar No. 07297500
Haynes and Boone, LLP Haynes and Boone, LLP Haynes and Boone, LLP
901 Main Street, Suite 3100 201 Main Street, Suite 2200 600 Congress Ave., Suite 1600
Dallas, Texas 75202 Fort Worth, Texas 76102 Austin, Texas 78701
Tel. No. (214) 651-5000 Direct Tel. No. (817) 347-6610 Tel. No. (512) 867-8400
Fax No. (214) 651-5940 Direct Fax No. (817) 348-2300 Fax No. (512) 867-8470
</TABLE>
COUNSEL TO THE DEBTORS AND THE DEBTORS-IN-POSSESSION
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SUPPLEMENTAL DISCLOSURE TO HOLDERS OF SENIOR NOTES
A. THE TREATMENT OF CLASS 6 HAS BEEN CHANGED AND THIS SUPPLEMENTAL DISCLOSURE
IS DESIGNED TO ASSIST YOU IN DECIDING IF YOU WOULD LIKE TO CHANGE YOUR
VOTE.
On October 16, 2000, the Debtors mailed a Solicitation Package to you
which contained the Debtors' Joint Plan of Reorganization Dated October 10, 2000
(the "Plan"), the Debtors' Final Disclosure Statement Under 11 U.S.C. ss.1125 In
Support of the Debtors' Joint Plan of Reorganization Dated October 10, 2000 (the
"Final Disclosure Statement"), Ballots for voting on the Plan, the Order (i)
Approving Final disclosure Statement; (ii) Setting Date for Confirmation Hearing
and Fixing Deadlines for Voting On and Objecting to the Plan: and (iii)
Establishing and Approving Procedures Relating to the Solicitation of
Acceptances and Rejections of the Plan, a Notice reiterating certain deadlines,
and a letter from the Creditors' Committee urging unsecured creditors to reject
the Plan. On or before November 14, 2000, each creditor receiving this
Supplemental Disclosure voted to accept the Plan.
On November 17, 2000, the Creditors' Committee, the Unofficial
Noteholders' Committee and the Debtors reached an agreement to modify the Plan
to provide more favorable treatment to unsecured creditors other than the
Noteholders. The Creditors' Committee has agreed to support confirmation of the
Plan so long as it is amended to (i) distribute more of the stock of Reorganized
Kitty Hawk (20% versus 15%) to the general unsecured creditors in Class 7; (ii)
distribute 80% (RATHER THAN 85%) of the stock of Reorganized Kitty Hawk to the
Noteholders; (iii) provide for a payment of $1.5 million on December 31, 2003 to
Class 7 if the Class 7 Allowed Claims are more than $85 million and an
additional payment of $1.5 million on December 31, 2004 if the Class 7 Allowed
Claims are more than $90 million; (iv) release all preference claims and other
claims arising under sections 544 through 551 of the Bankruptcy Code; and (v)
keep the Official Committee of Unsecured Creditors in place for a year after the
Effective Date to monitor the Debtor's claim objection and resolution process.
Because these changes affect the treatment of Class 6 creditors, you, as a
Class 6 creditor who voted to accept the Plan, are being asked to indicate
whether you wish to change your vote. To change your vote, you must return a new
ballot. IF YOU DO NOT RETURN A NEW BALLOT (OR BALLOTS), YOUR PRIOR ACCEPTANCE
WILL STAND. THE DEBTORS REQUEST THAT ALL CLASS 6 CREDITORS RETURN BALLOTS
CONFIRMING THEIR PRIOR VOTE.
This Supplemental Disclosure is designed to generally inform you of the
changes in the Amended Plan, a copy of which accompanies this Supplemental
Disclosure, and to solicit your acceptance of the Amended Plan.
B. CHANGES INCORPORATED IN THE AMENDED PLAN
The Amended Plan provides more favorable treatment to Class 7, which is
the Class of holders of Other Unsecured Claims. First, the Amended Plan
increases to 20% the percentage of the
SUPPLEMENTAL DISCLOSURE UNDER 11 U.S.C.SS.1125 IN SUPPORT OF THE DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION DATED NOVEMBER 22, 2000
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stock in the Reorganized Debtor that will be distributed, pro rata, to holders
of Allowed Class 7 Claims. As discussed in the Final Disclosure Statement, the
Plan incorporates a compromise of causes of action that the Debtors might assert
against the Noteholders. The Creditors' Committee believed that the compromise
was not fair to Class 7 because it did not give Class 7 enough in return for the
Debtors' release of its claims against the Noteholders. The Debtors and the
Creditors' Committee disagreed about the merits of the claims being released.
The claims are discussed in the Final Disclosure Statement beginning on page 18.
In response to negotiations with the Creditors' Committee, the Debtors and
the Unofficial Noteholders' Committee (whose members hold large Class 6 claims)
agreed to increase from 15% to 20% the percentage of stock that would be
distributed to Class 7. The Unofficial Noteholders' Committee also agreed that
the Plan should be amended to require the Reorganized Debtor to pay $1.5
million, pro rata, to holders of Allowed Class 7 Claims on December 31, 2003 if
the total Allowed Class 7 Claims exceed $85 million and to make an additional
payment of $1.5 million on December 31, 2004 if the Allowed Class 7 Claims
exceed $90 million. The Creditors' Committee agreed to support confirmation of
the Plan with these changes and the others described below.
In the Amended Plan, the Debtors release all preference claims as well as
all other claims under sections 544 through 551 of the Bankruptcy Code. This
release assures trade creditors that the Reorganized Debtor will NOT sue them to
recover payments made by the Debtors in the ninety (90) days preceding the
filing of the Bankruptcy Cases.
The Amended Plan keeps the Creditors' Committee in existence after the
Effective Date to monitor the claims objection and resolution process. The
Creditors' Committee will continue to have counsel, although counsel's fees will
be limited to $75,000. The Creditors' Committee's continuing role assures that
the Reorganized Debtor will object to claims that are overstated or to which the
Debtors have good defenses.
The Debtors believe that the compromise incorporated in the Amended Plan
will facilitate the prompt confirmation of the Amended Plan and the preservation
of the Debtors' value for the benefit of the Class 6 and Class 7 creditors who
will become the owners of Reorganized Kitty Hawk. The Debtors urge all holders
of Class 6 Claims to confirm their vote to accept the Amended Plan.
C. HEARING ON CONFIRMATION OF THE AMENDED PLAN
The Bankruptcy Court set DECEMBER 20, 2000 AT 1:15 P.M. DALLAS, TEXAS
TIME, as the time and date for the hearing (the "Confirmation Hearing") to
determine whether the Amended Plan has been accepted by the requisite number of
Creditors and whether the other requirements for Confirmation of the Plan have
been satisfied. Once commenced, the Confirmation Hearing may be adjourned or
continued by announcement in open court with no further notice. Holders of
Claims in Class 6 may change their ballots by voting in accordance with the
procedures set forth in Section D of this Supplemental Disclosure. The Debtors
have elected not to resolicit the holders of Claims in Class 7 because doing so
would delay confirmation. The Debtors have stipulated that Class 7 has rejected
the Amended Plan and intend to seek confirmation of the Amended Plan, or a
modification
SUPPLEMENTAL DISCLOSURE UNDER 11 U.S.C.SS.1125 IN SUPPORT OF THE DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION DATED NOVEMBER 22, 2000
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thereof, under section 1129(b) of the Bankruptcy Code (commonly referred to as a
"cramdown").
D. RETURNING BALLOTS
1. BALLOT RECORD DATE
Pursuant to Bankruptcy Rule 3017(d), September 19, 2000 is the "Ballot
Record Date" for determining which Noteholders may be entitled to vote to accept
or reject the Plan. Only holders of record of Senior Notes on that date are
entitled to cast ballots.
2. SPECIAL PROCEDURES FOR BALLOTS OF HOLDERS OF SENIOR NOTES
Each record holder and each bank, agent, broker or other nominee who holds
9.95% Senior Notes due 2004 of Kitty Hawk, Inc. in its name (the "Nominal
Holder" or "Nominee") that previously voted on behalf of or prevalidated ballots
for a beneficial holder or holders of Senior Notes should be receiving
Resolicitation Packages for distribution to the appropriate beneficial holders.
A Nominee shall, upon receipt of the Resolicitation Packages, forward the
Resolicitation Packages to the beneficial owners so that such beneficial
security holders may vote on the Plan pursuant to Code section 1126. The Debtors
shall provide for reimbursement, as an administrative expense, of all the
reasonable expenses of Nominal Holders in distributing the Resolicitation
Packages to said beneficial security holders.
Nominal Holders will have two options for obtaining the votes of
beneficial owners of securities, consistent with usual customary practices for
obtaining the votes of securities held in street name: (i) the Nominal Holder
may prevalidate the individual ballot contained in the Resolicitation Package
(by indicating that the record holders of the securities voted, and the
appropriate account numbers through which the beneficial owner's holdings are
derived) and then forward the Resolicitation Package to the beneficial owner of
the securities, which beneficial owner will then indicate its acceptance or
rejection of the Plan on the ballot, and then return the individual ballot
directly to the SOLICITATION AGENT in the return envelope to be provided in the
Resolicitation Package, or (ii) the Nominal Holder may forward the
Resolicitation Package to the beneficial owner of the securities for voting
along with a return envelope provided by and addressed to the NOMINAL HOLDER,
with the beneficial owner then returning the individual ballot to the Nominal
Holder, the Nominal Holder will subsequently summarize the votes, including, at
a minimum, the number of beneficial holders voting to accept and to reject the
Plan who submitted ballots to the Nominal Holder and the amount of such
securities so voted, in an affidavit (the "Affidavit of Voting Results"), and
then return the Affidavit of Voting Results to the Solicitation Agent. By
submitting an Affidavit of Voting Results, each such Nominal Holder certifies
that the Affidavit of Voting Results accurately reflects votes and choices
reflected on the ballots received from beneficial owners holding such securities
as of the Ballot Record Date.
Pursuant to 28 U.S.C.ss.ss.157 and 1334, 11 U.S.C.ss.105, and Bankruptcy
Rule 1007(i) and (j), the Nominees shall maintain the individual ballots of its
beneficial owners and evidence of authority to vote on behalf of such beneficial
owners. No such ballots shall be destroyed or
SUPPLEMENTAL DISCLOSURE UNDER 11 U.S.C.SS.1125 IN SUPPORT OF THE DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION DATED NOVEMBER 22, 2000
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otherwise disposed of or made unavailable without such action first being
approved by prior order of the Bankruptcy Court.
3. DEADLINE FOR SUBMITTING BALLOTS
BALLOTS MUST BE SUBMITTED TO (A) THE SOLICITATION AGENT, OR (B)
ALTERNATIVELY, TO THE NOMINAL HOLDERS, AND MUST ACTUALLY BE RECEIVED BY EITHER
OF THOSE PERSONS, WHETHER BY MAIL, DELIVERY, OR FACSIMILE, BY DECEMBER 14, 2000
AT 5:00 P.M. DALLAS, TEXAS TIME (THE "BALLOT RETURN DATE"). ANY BALLOTS RECEIVED
AFTER THAT TIME WILL NOT BE COUNTED. ANY BALLOT WHICH IS NOT EXECUTED BY A
PERSON AUTHORIZED TO SIGN SUCH BALLOT WILL NOT BE COUNTED. IN THE EVENT THAT
BALLOTS ARE SUBMITTED TO THE NOMINEES, AFFIDAVITS OF VOTING RESULTS REQUIRED OF
THE NOMINEES MUST BE RECEIVED BY THE SOLICITATION AGENT WITHIN ONE (1) BUSINESS
DAY AFTER THE BALLOT RETURN DATE, BUT MAY BE SENT BY FACSIMILE TRANSMISSION,
PROVIDED THAT AN ORIGINAL, SIGNED AFFIDAVIT OF VOTING RESULTS IS RECEIVED BY THE
SOLICITATION AGENT WITHIN TWO (2) BUSINESS DAYS OF THE BALLOT RETURN DATE.
IF YOU HAVE ANY QUESTIONS REGARDING THE PROCEDURES FOR VOTING ON THE
AMENDED PLAN, CONTACT THE SOLICITATION AGENT OR IAN PECK, HAYNES AND BOONE, LLP,
901 MAIN STREET, SUITE 3100, DALLAS, TEXAS 75202, TELEPHONE (214) 651-5000,
TELECOPY (214) 651-5940.
APPROVAL BY BANKRUPTCY COURT
THIS SUPPLEMENTAL DISCLOSURE WAS APPROVED BY THE BANKRUPTCY COURT ON
NOVEMBER 22, 2000. Such approval is required by the Bankruptcy Code and does not
constitute a judgment by the Bankruptcy Court as to the desirability of the
Plan, or as to the value or suitability of any consideration offered thereunder.
Such approval does indicate, however, that the Bankruptcy Court has determined
that the Supplemental Disclosure meets the requirements of section 1125 of the
Bankruptcy Code and contains adequate information to permit the holders of
Allowed Class 6 Claims to make an informed judgment regarding acceptance or
rejection of the Amended Plan. This Supplemental Disclosure should be read in
conjunction with the Final Disclosure Statement. This Supplemental Disclosure
supplements the Final Disclosure Statement to reflect changes included in the
Amended Plan. The Final Disclosure Statement includes important information not
included in this Supplemental Disclosure. If you have misplaced the Final
Disclosure Statement previously sent to you, you may print a copy of the Final
Disclosure Statement off of the World Wide Web by accessing
www.haynesboone.com/kittyhawk or you may request a copy from Ian Peck, Haynes
and Boone, LLP, 901 Main Street, Suite 3100, Dallas, Texas 75202, Telephone
(214) 651-5000, Telecopy (214) 651-5940.
THE APPROVAL BY THE BANKRUPTCY COURT OF THIS SUPPLEMENTAL DISCLOSURE DOES
NOT CONSTITUTE AN ENDORSEMENT BY THE BANKRUPTCY COURT OF THE AMENDED PLAN
OR A GUARANTEE OF THE ACCURACY OR COMPLETENESS OF THE INFORMATION
CONTAINED HEREIN. THE MATERIAL HEREIN CONTAINED IS INTENDED SOLELY FOR THE
USE OF CREDITORS OF THE DEBTORS IN EVALUATING THE AMENDED PLAN AND VOTING
TO ACCEPT OR REJECT THE AMENDED PLAN AND, ACCORDINGLY,
SUPPLEMENTAL DISCLOSURE UNDER 11 U.S.C.SS.1125 IN SUPPORT OF THE DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION DATED NOVEMBER 22, 2000
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MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN THE DETERMINATION OF HOW
TO VOTE ON THE AMENDED PLAN. THE DEBTORS' REORGANIZATION PURSUANT TO THE
AMENDED PLAN IS SUBJECT TO NUMEROUS CONDITIONS AND VARIABLES AND THERE CAN
BE NO ABSOLUTE ASSURANCE THAT THE AMENDED PLAN, AS CONTEMPLATED, WILL BE
EFFECTUATED.
THE DEBTORS BELIEVE THAT THE AMENDED PLAN AND THE TREATMENT OF CLAIMS
THEREUNDER IS IN THE BEST INTERESTS OF CREDITORS, AND URGE THAT YOU VOTE
TO ACCEPT THE AMENDED PLAN.
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
SUPPLEMENTAL DISCLOSURE UNDER 11 U.S.C.SS.1125 IN SUPPORT OF THE DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION DATED NOVEMBER 22, 2000
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Dated: November 22, 2000.
KITTY HAWK, INC. OK TURBINES, INC.
Debtor and Debtor-In-Possession Debtor and Debtor-In-Possession
/S/ TILMON J. REEVES /S/ TILMON J. REEVES
------------------------------------------------------ ------------------------------------------------------
By: Tilmon J. Reeves By: Tilmon J. Reeves
Its: Chief Executive Officer Its: Chief Executive Officer
KITTY HAWK AIRCARGO, INC. LONGHORN SOLUTIONS, INC.
Debtor and Debtor-In-Possession Debtor and Debtor-In-Possession
/S/ TILMON J. REEVES /S/ TILMON J. REEVES
------------------------------------------------------ ------------------------------------------------------
By: Tilmon J. Reeves By: Tilmon J. Reeves
Its: Chief Executive Officer Its: Chief Executive Officer
KITTY HAWK CHARTERS, INC. AIRCRAFT LEASING, INC.
Debtor and Debtor-In-Possession Debtor and Debtor-In-Possession
/S/ TILMON J. REEVES /S/ TILMON J. REEVES
------------------------------------------------------ ------------------------------------------------------
By: Tilmon J. Reeves By: Tilmon J. Reeves
Its: Chief Executive Officer Its: Chief Executive Officer
KITTY HAWK INTERNATIONAL, INC. AMERICAN INTERNATIONAL TRAVEL, INC.
Debtor and Debtor-In-Possession Debtor and Debtor-In-Possession
/S/ TILMON J. REEVES /S/ TILMON J. REEVES
------------------------------------------------------ ------------------------------------------------------
By: Tilmon J. Reeves By: Tilmon J. Reeves
Its: Chief Executive Officer Its: Chief Executive Officer
KITTY HAWK CARGO, INC. FLIGHT ONE LOGISTICS, INC.
Debtor and Debtor-In-Possession Debtor and Debtor-In-Possession
/S/ TILMON J. REEVES /S/ TILMON J.REEVES
------------------------------------------------------- ------------------------------------------------------
By: Tilmon J. Reeves By: Tilmon J. Reeves
Its: Chief Executive Officer Its: Chief Executive Officer
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SUPPLEMENTAL DISCLOSURE UNDER 11 U.S.C.SS.1125 IN SUPPORT OF THE DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION DATED NOVEMBER 22, 2000
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OK TURBINES, INC.
<S> <C> <C>
Robert D. Albergotti John D. Penn Sarah B. Foster
State Bar No. 00969800 State Bar No. 15752300 State Bar No. 07297500
Haynes and Boone, LLP Haynes and Boone, LLP Haynes and Boone, LLP
901 Main Street, Suite 3100 201 Main Street, Suite 2200 600 Congress Ave., Suite 1600
Dallas, Texas 75202 Fort Worth, Texas 76102 Austin, Texas 78701
Tel. No. (214) 651-5000 Direct Tel. No. (817) 347-6610 Tel. No. (512) 867-8400
Fax No. (214) 651-5940 Direct Fax No. (817) 348-2300 Fax No. (512) 867-8470
</TABLE>
/S/ ROBERT D. ALBERGOTTI
------------------------------
Robert D. Albergotti (No. 00969800)
John D. Penn (No. 15752300)
Sarah B. Foster (No. 07297500)
COUNSEL TO THE DEBTORS AND THE DEBTORS-IN-POSSESSION
SUPPLEMENTAL DISCLOSURE UNDER 11 U.S.C.SS.1125 IN SUPPORT OF THE DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION DATED NOVEMBER 22, 2000
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