Matt Molnar
2007-03-20, 06:54 PM
The DOT declared today that Virgin America's reapplication for an operating certificate is vastly improved over their original application, and outlined additional changes that, if met, would satisfy the DOT's citizenship requirements.
The added requirements:
• Amending a variety of material agreements, including existing aircraft leases, so as to address concerns about the role of the applicant’s largest foreign investor in the formation of the airline, by restricting the Virgin Group’s power over changes in such agreements and other related matters such as capital expenditures.
• Amending the company’s loan agreements with the Virgin Group and other formative documents to eliminate the latter’s ability (through veto rights and the requirement of prior written consent) to control the applicant’s business.
• Replacing its current Chief Executive Officer, who the record suggested might be considered “beholden” to foreign interests under DOT precedent, with a new official presumably having no prior affiliation with the non-U.S. investors of Virgin America.
• Restructuring its board of directors so as to reduce the number of Virgin Group designees.
• Requiring that the disinterested directors on the Virgin America board (that is, U.S. citizens) separately approve of the appointment or replacement of the trustee of Virgin Group’s shareholdings.
• Amending the voting trust agreement to require that the Trustee vote its shares proportionally to the other shareholders as to any matter that, in the opinion of the U.S. investor directors, creates a conflict of interest between the interests of Virgin Group and that of U.S. shareholders.
• Modifying the Virgin Trademark License Agreement to remove certain
geographic and operational restrictions on Virgin America and the requirement that it pay royalties to the Virgin Group should the applicant conduct operations independent of the Virgin name.
• Confirming that the current CEO has terminated employment with the applicant within 90 days of the certificate being issued and any follow-on consultancy within 180 days following termination of employment.
• Submitting copies of all executed and signed agreements prior to certification.
• Reporting to the Department in advance if any additional loans (or other debt funding) are to be provided to it from the Virgin Group.
• Establishing a voting trust to administer the Virgin Group’s 25 percent equity interest in the airline.
Full document: http://dmses.dot.gov/docimages/p89/461049.pdf
Reuters story: http://www.reuters.com/article/tnBasicI ... 8220070320 (http://www.reuters.com/article/tnBasicIndustries-SP/idUSN2038148220070320)
The added requirements:
• Amending a variety of material agreements, including existing aircraft leases, so as to address concerns about the role of the applicant’s largest foreign investor in the formation of the airline, by restricting the Virgin Group’s power over changes in such agreements and other related matters such as capital expenditures.
• Amending the company’s loan agreements with the Virgin Group and other formative documents to eliminate the latter’s ability (through veto rights and the requirement of prior written consent) to control the applicant’s business.
• Replacing its current Chief Executive Officer, who the record suggested might be considered “beholden” to foreign interests under DOT precedent, with a new official presumably having no prior affiliation with the non-U.S. investors of Virgin America.
• Restructuring its board of directors so as to reduce the number of Virgin Group designees.
• Requiring that the disinterested directors on the Virgin America board (that is, U.S. citizens) separately approve of the appointment or replacement of the trustee of Virgin Group’s shareholdings.
• Amending the voting trust agreement to require that the Trustee vote its shares proportionally to the other shareholders as to any matter that, in the opinion of the U.S. investor directors, creates a conflict of interest between the interests of Virgin Group and that of U.S. shareholders.
• Modifying the Virgin Trademark License Agreement to remove certain
geographic and operational restrictions on Virgin America and the requirement that it pay royalties to the Virgin Group should the applicant conduct operations independent of the Virgin name.
• Confirming that the current CEO has terminated employment with the applicant within 90 days of the certificate being issued and any follow-on consultancy within 180 days following termination of employment.
• Submitting copies of all executed and signed agreements prior to certification.
• Reporting to the Department in advance if any additional loans (or other debt funding) are to be provided to it from the Virgin Group.
• Establishing a voting trust to administer the Virgin Group’s 25 percent equity interest in the airline.
Full document: http://dmses.dot.gov/docimages/p89/461049.pdf
Reuters story: http://www.reuters.com/article/tnBasicI ... 8220070320 (http://www.reuters.com/article/tnBasicIndustries-SP/idUSN2038148220070320)