Mesa Shareholders To Vote November 17 On Republic Merger; Combined Airline Expected To Hold $300M Cash, $1.1B Debt

Author: Benzinga Newsdesk | October 31, 2025 06:13am

Mesa Air Group, Inc. (NASDAQ:MESA) ("Mesa" or the "Company") today announced that it has entered into an Amendment (the "Amendment") to its Loan and Guarantee Agreement, dated as of October 30, 2020 (as theretofore amended, the "Loan Agreement"), among the Company, Mesa Airlines, the Guarantors party thereto from time to time, Jefferies Capital Services, LLC (as successor in interest to the United States Department of the Treasury) (the "Lender" or "Jefferies"), and The Bank of New York Mellon as Administrative Agent and Collateral Agent (the "Agents") (collectively, the "Parties"). Under the terms of the Amendment, Jefferies agreed to:

• extend the Maturity Date of the Loan Agreement from October 30, 2025 to November 28, 2025, subject to the Company's further right to extend the Maturity Date by 30 days by providing notice to the Administrative Agent by no later than November 27, 2025;
  
  
  
   
• reduce the interest rate under the Loan Agreement to zero percent (0%) for a period of 90 days from the date of the Amendment;
  
  
  
   
• waive certain restrictions in the Loan Agreement and the collateral coverage ratio and minimum liquidity tests through the Maturity Date; and
  
  
  
   
• subject to the payment in full of the obligations under the Loan Agreement on the Maturity Date, reduce the principal amount of the obligations under the Loan Agreement by $12.3 million.
  
  
  
   

In connection with the Amendment, Mesa Airlines deposited cash in a collateral account controlled by Jefferies and agreed to pledge an aircraft engine, each as collateral for the obligations under the Loan Agreement.

Merger Update

On April 7, 2025, Republic Airways Holdings Inc. ("Republic") and the Company announced that they had entered into a definitive agreement to merge (the "Merger" and the "Merger Agreement") and create a leading publicly-traded regional airline company in an all-stock transaction. Upon the closing, the combined company will be renamed Republic Airways Holdings Inc. and is expected to remain NASDAQ-listed under the new ticker symbol "RJET." Set forth below are additional updates to the Merger and certain Merger highlights, as well as information previously set forth in the Company's earnings release dated August 13, 2025.

• The Company's previously filed registration statement was declared effective by the SEC on September 30, 2025, and a definitive proxy statement/prospectus was filed with the SEC on October 2, 2025 and mailed to Mesa stockholders on or about October 3, 2025 (the "Proxy Statement/Prospectus").
  
  
  
   
• Mesa's special meeting of stockholders will be held on November 17, 2025, at 9:00 a.m. Mountain Standard Time, to vote on the proposals set forth in the Proxy Statement/Prospectus.
  
  
  
   
• The closing of the Merger is tentatively scheduled for November 19, 2025, subject to the terms and conditions of the Merger Agreement.
  
  
  
   
• Given the strong performance by Republic during the first half of calendar year 2025, we now estimate that the combined company would have twelve-month run-rate annual revenue in the range of approximately $1.8 billion to $2.0 billion.
  
  
  
   
• Additionally, for the first six months of calendar year 2025, Republic generated approximately $169 million in adjusted EBITDA, and Mesa generated $14 million in adjusted EBITDA over the same six-month period, for a total of $183 million (see reconciliation to the nearest GAAP measure at the end of this Press Release). Our expectation is that we will continue to see strong combined financial performance in the second half of the calendar year.
  
  
  
   
• Further, we anticipate the pro forma cash and debt balances of the combined company post-Merger closing to be in excess of $300 million and approximately $1.1 billion, respectively, with Mesa contributing no debt to the combined business.
  
  
  
   
• Post-Merger closing, the 60 E-175 aircraft we operate today will be supported by a new and enhanced approximately 10-year capacity purchase agreement with United Airlines. Said Jonathan Ornstein, Chief Executive Officer of Mesa, "We are pleased Mesa would support day-one benefits for the combined company, and we continue to work closely with the Republic executive team to position our airline for a successful Merger closing and integration with Republic."
  
  
  
   

Net Debt Amount

As described in detail in the Proxy Statement/Prospectus, the Pre-Merger Mesa Shareholders will own between 6% and 12% of the combined company, depending on the allocation of the Escrow Shares and the determination of the Net Debt Amount. The Escrow Shares will first be used to compensate United Airlines for its extinguishment of any Net Debt Amount existing as of the closing of the Merger. The value of the Escrow Shares will be based on the combined company's 20-trading day average share price ending 60 calendar days after the closing of the Merger. Any Escrow Shares remaining after distributions, if any, to United Airlines and the combined company based on the determination of the Net Debt Amount will be allocated to the Pre-Merger Mesa Shareholders. Accordingly, the value of the shares of the combined company following the closing will directly impact the allocation of the Escrow Shares and the amount of the Escrow Shares, if any, available for distribution to the Pre-Merger Mesa Shareholders. Additional detailed information regarding the Escrow Shares and their disposition is set forth in the Proxy Statement/Prospectus, including specific examples of various Net Debt Amount scenarios relative to the then existing per share price of the combined company's common stock.

NOL

As set forth in the Proxy Statement/Prospectus, as of June 30, 2025, Mesa had aggregate federal and state net operating losses ("NOLs") of approximately $277.6 million and $150.6 million, which expire in fiscal years 2030-2038 and 2024-2043, respectively. As the Company focuses on its special meeting of stockholders to be held on November 17, 2025, and the closing of the Merger on or about November 19, 2025, it continues to focus on maximizing stockholder value. [In this regard, at the closing of the Merger the Company will be credited with the value of the NOL as of such date toward the Net Debt Amount calculation, which value is determined based on several factors including:

• Pre-2018 NOL carryovers available
• Post-2018 80% NOL carryovers available
• Section 163(j) carryover
• Federal tax rate
• Market capitalization as of the Closing of the Merger based on the total outstanding shares and the price per share on the closing
• Applicable Federal Rate % limitation
• Net Present Value at a discount rate
  
  
  
   

The share price of Mesa common stock as of the closing of the Merger will have a significant impact on the value the Company will receive for the NOL (and applied to the Net Debt Amount calculation). Set forth below is the value of the NOL based on the assumed price per share of Mesa's common stock as of the closing of the Merger:

• $1.40 – $5.8 million
• $2.00 – $8.4 million
• $2.50 – $10.4 million
   

Posted In: MESA