Warning: Possible Mesa (Go!) Bankruptcy?
Mesa said in an SEC filing yesterday that it’s seeking shareholder approval to issue up to $37.8 million in new common stock to pay off bondholders.
If they do not have adequate cash resources, “… the Company could be in default… and the Company’s business and operations could be materially adversely affected. “
The Honolulu Advertiser quoted industry Analyst Scott Hamilton: “This could mean a bankruptcy filing if shareholders don’t go along.” He also said that even if shareholders do go along, it does not remove the risk of a bankruptcy because of the dire language in the filing.
This follows a string of bad news for Mesa, including the loss of a $20M Delta Airlines regional contract, its dangerously low stock price ($0.97) and market valuation, this week’s S&P delisting and an $80 million judgment to Hawaiian Airlines.
As I’d previously indicated, we believe Mesa owns nearly 60 of its regional jets outright, which means that cash could also be raised through a potential lease-back arrangement.
While Mesa may well still have some life left in it, I suggest travelers using Go! inter-island service be extremely cautious.
