Filed by Mesa Air Group, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant Rules 14a-12 and 14d-2
of the Securities Exchange Act of 1934
Subject Company: Atlantic Coast Airlines Holdings, Inc.
Commission File No: 0-21976
Press Release
Mesa Air Group Proposes to Merge with Atlantic Coast Airlines
- Aims to Renew Code-Sharing Agreements -
PHOENIX, Oct 6, 2003 (BUSINESS WIRE) -- Mesa Air Group, Inc. (Nasdaq: MESA)
today announced that it has made a proposal to the board of directors of
Atlantic Coast Airlines Holdings, Inc. (Nasdaq: ACAI) to combine the two
companies. The combination would create the leading operator in the regional
airline industry, with nearly 300 aircraft and broad reach across major US
markets.
The attached letter, expressing interest in a combination of the companies, has
been sent from Mesa Chairman and Chief Executive Officer Jonathan Ornstein, to
ACA's Chairman and Chief Executive, Kerry Skeen.
Under the terms of the all-stock offer, Mesa has offered 0.9 of a Mesa share for
each share of ACA. Based on Mesa's stock price on October 3, 2003, the offer is
valued at $11.30 per ACA share. That represents a 25% premium over its closing
stock price Friday and a 35% premium over ACA's average trading price since July
28, 2003.
Mr. Ornstein commented: "ACA is a great company with an excellent operational
track record, committed hard working employees and a proven history of
financially successful code share partnerships. While the company has indicated
that it intends to end its relationship with United Airlines and shift strategy,
we continue to believe that a business model based on revenue guarantee code
share relationships with major airlines serving hub networks offers the greatest
long-term prospects for shareholders, customers and employees. By bringing these
two companies together, and maintaining the successful revenue guarantee code
share business model, we have the opportunity to create the leading regional
airline in the United States."
Mesa Air Group will host a conference call on Tuesday, October 7th, at 11:00AM
EST to discuss today's announcement. To participate in the call, analysts and
investors may dial into the call at 800-575-5790, and international callers may
dial into 719-457-0349. The passcode for both lines is 709373. A presentation to
accompany Tuesday's conference call may be found at www.mesa-air.com prior to
the call.
Replay information is as follows:
Dial-in: 888-203-1112
International: 719-457-0820
Passcode: 709373
Mesa currently operates 149 aircraft with 938 daily system departures to 163
cities, 40 states, the District of Columbia, Canada, Mexico and the Bahamas. It
operates in the West and Midwest as America West Express; the Midwest and East
as US Airways Express; in Denver as Frontier JetExpress and United Express; in
Kansas City with Midwest Express and in New Mexico and Texas as Mesa Airlines.
The Company, which was founded in New Mexico in 1982, has approximately 4,000
employees. Mesa is a member of the Regional Airline Association and Regional
Aviation Partners.
This press release contains various forward-looking statements that are based on
management's beliefs, as well as assumptions made by and information currently
available to management. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable; it can give no
assurance that such expectations will prove to have been correct. Such
statements are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, projected or expected. The company does not intend to
update these forward-looking statements prior to its next required filing with
the Securities and Exchange Commission.
October 6, 2003
Mr. Kerry B. Skeen
Chairman and Chief Executive Officer
Atlantic Coast Airlines Holdings, Inc.
45200 Business Court
Dulles, Virginia, 20166
Dear Kerry,
I tried to reach you this morning to tell you first hand about our intentions.
Mesa Air Group, Inc. ("Mesa") believes that a combination with Atlantic Coast
Airlines Holdings, Inc. ("ACA" or the "Company") is compelling and in the best
interests of both companies, our respective shareholders, employees and
customers. While we have reviewed only publicly available data to this point, we
are prepared to move forward promptly with a business combination between the
two companies.
Accordingly, Mesa is seeking to enter into an agreement with ACA to acquire all
the outstanding stock of ACA in a tax-free transaction whereby Mesa would issue
0.9 of a share of its common stock for each ACA share. Based on our closing
share price of $12.55 and based on ACA's closing share price of $9.02 on October
3, 2003, our offer represents a premium to your shareholders of 25% over the
current value of their shares. This price also represents a premium of 35% over
the average closing price of ACA since late July, and we believe shares in the
combined company will provide exceptional future value to the ACA shareholders.
There are clear strategic benefits. A combination would form the basis to
leverage each company's assets, franchise, partners and management expertise to
better position the combined company in today's competitive marketplace. It is
clear that such a transaction would enable us to service the needs of our
airline partners more efficiently and profitably. If we can realize only a small
portion of the potential strategic benefits, we believe our combined earnings
could improve by over 25%. Furthermore, our focus will remain in the business of
providing cost effective regional feed for our airline partners.
Our proposal will be subject to only customary conditions, including among
others, obtaining necessary regulatory approvals, the redemption of the ACA
Right's Plan in accordance with its terms, the completion of satisfactory due
diligence, negotiation of definitive agreements and necessary shareholder
approvals.
Although we are offering a full and fair price to ACA shareholders, we may have
flexibility on deal terms and structure if you are willing to work with us
towards consummating a transaction. In connection with our proposal, we have
retained Cadwalader, Wickersham & Taft LLP as counsel and Merrill Lynch & Co. as
financial advisor.
In light of the compelling benefits to our respective shareholders and the
materiality of this proposal, we are publicly releasing the text of this letter.
Our strong preference would be to work with you to reach a mutually acceptable
transaction. I would be happy to meet with you or to meet with your Board at its
convenience to discuss in greater detail our thoughts with respect to a possible
business combination and the future role that you and your management team would
have in the combined entity. I look forward to hearing from you or one of your
representatives as soon as possible.
Sincerely,
Jonathan G. Ornstein
Chairman of the Board & Chief Executive Officer
cc: Board of Directors, ACA
Additional Information and Where to Find it
More detailed information pertaining to the proposal by Mesa Air Group, Inc.
("Mesa") will be set forth in appropriate filings to be made with the SEC.
Investors and security holders are urged to carefully read the relevant
documents regarding the proposed transactions that will be filed with the SEC
because they will contain important information. You will be able to obtain the
documents when they become available free of charge at the website maintained by
the SEC at www.sec.gov. In addition, you may obtain documents filed with the SEC
by Mesa free of charge by requesting them in writing from Mesa Air Group, Inc.,
410 North 44th Street, Suite 700, Phoenix, Arizona 85008, Attention: Office of
the Corporate Secretary (602-685-4000).
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such jurisdiction.
Participants in Solicitation
Mesa and certain other persons named below may be deemed to be participants in
the solicitation of proxies. The participants in this solicitation may include
the directors and executive officers of Mesa. A detailed list of the names of
Mesa's directors and officers is contained in Mesa's proxy statement for its
2003 annual meeting, which may be obtained without charge at the SEC's Internet
site (http://www.sec.gov).
As of the date of this communication, none of the foregoing participants,
individually beneficially owns in excess of 5% of Atlantic Coast Airlines
Holdings, Inc. ("ACA") common stock. Except as disclosed above and in Mesa's
proxy statement for its 2003 annual meeting and other documents filed with the
SEC, to the knowledge of Mesa, none of the directors or executive officers of
Mesa has any material interest, direct or indirect, by security holdings or
otherwise, in Mesa or ACA.