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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 6, 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) Item 5. Other Events. On November 6, 2000, Continental Airlines, Inc. (the "Company") and Northwest Airlines issued a joint press release announcing that they had reached an agreement in principle regarding the recapitalization of the Company's Class A
common stock, the repurchase by the Company of certain Class A common stock of the Company owned by Northwest and related matters as part of a proposal to settle Civil Action No. 98-74611 (United States of America v. Northwest Airlines Corp. and Continental Airlines, Inc.). The press release, the Agreement in Principle and the related Class A Recapitalization Term Sheet are filed as exhibits to this report. Item 7. Financial Statements and Exhibits. (c) Exhibits
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
Jeffery A. Smisek
Executive Vice President and
General Counsel
November 6, 2000
EXHIBIT INDEX
Exhibit 99.1
Continental Airlines contact: Northwest Airlines contact:
Corporate Communications Corporate Communications
713-324-5080 612-727-4284
CONTINENTAL, NORTHWEST REACH AGREEMENT
IN PRINCIPLE ON STOCK REPURCHASE
Airlines to seek delay in DOJ case to permit definitive agreement to be concluded.
HOUSTON and MINNEAPOLIS/ST. PAUL, Nov. 6, 2000 -- Continental Airlines (NYSE: CAL and CAL.A) and Northwest Airlines (NASDAQ: NWAC) today announced that the two airlines have reached an agreement in principle regarding the sale to Continental of its common stock held by Northwest Airlines. The two airlines, which are defendants in an ongoing suit brought by the U.S. Department of Justice concerning the 1998 stock purchase, plan to jointly petition U.S. District Court Judge Denise Page Hood for a seven day delay in the court proceeding to allow the two airlines to conclude definitive agreements. A final agreement is subject to the approval of the boards of Northwest and Continental, the Department of Justice and certain third parties.
The repurchase of Northwest's interest in Continental will be part of a recapitalization of Continental, whereby each outstanding share of Continental Class A
common stock will be reclassified into 1.32 shares of Continental Class B common stock.
In connection with the transaction, Continental will repurchase from Northwest
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CO/NW REACH AGREEMENT/PAGE 2
approximately 6.69 million Continental Class A shares for $450 million in cash, and
Northwest will retain approximately 2.6 million shares of Continental Class B common stock after the recapitalization.
The alliance agreement between Continental and Northwest will be amended and its term extended through 2025, and in connection with that amendment, Continental will issue to Northwest a special series of preferred stock. That preferred stock will give Northwest the right to block certain business combinations and similar change of control transactions involving Continental and a third party major air carrier during the term of the alliance agreement, subject to redemption by Continental of the preferred stock upon certain events, including upon a change of control of Northwest. The current governance agreements between Northwest and Continental that contain the restrictions on Northwest's rights to vote its Continental Class A common stock will be terminated in connection with the transactions. As part of the transactions, Continental has obtained a waiver of a right of first offer with respect to the Continental shares owned by Northwest, conditional on the closing of the transactions.
The parties anticipate that the transactions contemplated by their agreement in
principle will close approximately two months after the parties sign definitive agreements, which they anticipate executing within one week of today's announcement. The transactions are expected to be subject to certain conditions, including the settlement
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CO/NW REACH AGREEMENT/PAGE 3
of the current litigation by the United States against Northwest and Continental relating to Northwest's ownership interest in Continental.
"Continental has always valued Northwest as a strong alliance partner," said Continental Chairman and Chief Executive Officer Gordon Bethune. "Putting this divisive issue behind us will allow both parties to focus their energies on an alliance that benefits consumers, shareholders and our employees for many years to come."
"Our two objectives regarding Continental have always been to build a successful alliance and to insure the independence of Continental," said John Dasburg, Northwest president and CEO. "We believe we have a means to accomplish those two goals, while at the same time recouping our investment. The issues that bring Northwest and Continental together are far stronger and more compelling than those that divided us on this issue. We have a great partner in Continental and because of that our alliance is good for consumers, good for competition and good for the industry."
Mr. Bethune and Mr. Dasburg expressed their gratitude to Judge Hood for her efforts to resolve this litigation.
Safe Harbor
Statements in this news release which are not purely historical facts, including statements regarding our beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that
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CO/NW REACH AGREEMENT/PAGE 4
could cause actual results to differ materially from the plans, intentions and expectations
reflected in or suggested by the forward-looking statements. Information with respect to the factors and events that could cause these differences is contained in the Companies'
Securities and Exchange Commission filings, including the Companies' Annual Report or Form 10-K for the year ended December 31, 1999. We undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise
after the date of this release.
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00175
EXHIBIT 99.2
AGREEMENT IN PRINCIPLE
Continental Airlines, Inc. ("Continental") and Northwest Airlines Corporation, Northwest Airlines Holdings Corporation and Northwest Airlines, Inc. (collectively, "Northwest") intend to negotiate definitive agreements (the "Definitive Agreements") governing the transactions contemplated by the attached Class A Recapitalization Term Sheet (the "Term Sheet").
This Agreement in Principle is executed and dated as of November 5, 2000.
CONTINENTAL AIRLINES, INC.
By:____________________________
NORTHWEST AIRLINES CORPORATION
By:____________________________
NORTHWEST AIRLINES HOLDINGS CORPORATION
By:____________________________
NORTHWEST AIRLINES, INC.
By:____________________________
Exhibit 99.3
Class A Recapitalization Term Sheet
(a) In the event of a NW Change of Control, each of CO and NW shall have the right to terminate the Master Alliance Agreement on 6 months' prior written notice, without liability or penalty to the other party.
(v) Redemption - The Series B Preferred Stock will be redeemable at the option of CO for an amount equal to its liquidation preference at any time (a) if the Series B Preferred Stock is transferred or encumbered except as contemplated by Section 5(ix), (b) after a Change of Control of NW, (c) if NW materially breaches the Standstill Agreement (as described below), subject to the ability to cure inadvertent breaches within a reasonable period of time, or triggers the Revised Rights Plan (as described below), or (d) if the Master Alliance Agreement (as amended as described above) between CO and NW terminates or expires, other than as a result of a breach or wrongful termination thereof by CO.
(vi) Liquidation Preference - The liquidation preference of the Series B Preferred Stock will be $100.