INFORMATION ABOUT WHEELS UP
Company Overview
Wheels Up is a leading provider of on-demand private aviation in the U.S. and one of the largest private aviation companies in the world. Wheels Up offers a complete global aviation solution with a large, modern and diverse fleet, backed by an uncompromising commitment to safety and service. Customers can access membership programs, charter and whole aircraft sales, as well as unique commercial travel benefits through a strategic partnership with Delta Air Lines, Inc. (“Delta”). Wheels Up also offers freight, safety and security solutions and managed services to individuals, industry, government and civil organizations.
Wheels Up is guided by the mission to connect private flyers to aircraft, and one another, through an open platform that seamlessly enables life’s most important experiences. Powered by a global private aviation marketplace connecting its base of approximately 12,000 members and customers to a network of approximately 1,500 safety-vetted and verified private aircraft, Wheels Up is widening the aperture of private travel for millions of consumers globally. With the Wheels Up mobile app and website, members and customers have the digital convenience to search, book and fly.
Expanded Strategic Partnership with and Investment from Delta, Certares, Knighthead and Cox
On August 15, 2023, we announced a plan for an expanded partnership with and investment from certain of the Lenders (as defined below), including Delta, Certares Management LLC (“Certares”), and Knighthead Capital Management LLC (“Knighthead”), to accelerate our business transformation (the “Transaction”). The Transaction, which consisted of a credit facility and issuance of Common Stock described below, signed and closed on September 20, 2023 (the “Closing Date”) with funds contributed by Delta, CK Wheels, an entity co-managed by affiliates of Certares and Knighthead, and Cox Enterprises, Inc. (“Cox” and, together with Delta and CK Wheels, the “Lenders”).
The credit facility (the “Credit Facility”) is comprised of a $350 million term loan funded on the Closing Date from the Lenders and a commitment for a $100 million revolving credit facility from Delta. The terms of the credit agreement for the Credit Facility permit a new lender to provide a $50 million term loan after the Closing Date, as approved by the Lenders.
In connection with the closing of the Credit Facility, the Lenders received newly issued Common Stock representing 80% of our outstanding shares of Common Stock as of September 15, 2023, on a fully diluted basis after giving effect to such issuance (the “Initial Issuance Common Stock”). Pursuant to the terms of the Investment and Investor Rights Agreement, dated as of September 20, 2023 (the “Investor Rights Agreement”), by and among Wheels Up and the Lenders, assuming approval of Proposal No. 1 by our stockholders, we will issue additional Common Stock to the Lenders such that the Lenders (including any additional lender under the credit agreement for the Credit Facility that executes a joinder to the Investor Rights Agreement) collectively will own 95% of our outstanding shares of Common Stock as of September 15, 2023, on a fully diluted basis after giving effect to such issuances (the “Deferred Issuance Common Stock”).
The Audit Committee of the Board determined that the delay that would be caused in obtaining stockholder approval for both the Initial Issuance Common Stock and the Deferred Issuance Common Stock would jeopardize our financial viability. Therefore, we issued the Initial Issuance Common Stock without prior stockholder approval based on the Financial Distress Exception provided for in the Shareholder Approval Policy of the New York Stock Exchange (“NYSE”). In reliance on the exception, we mailed to all stockholders a letter notifying them of our intention to issue the Initial Issuance Common Stock and the Deferred Issuance Common Stock without seeking their approval. Approximately 22 days after the completion of the mailing of such notice, we issued the Initial Issuance Common Stock to the Lenders. The Deferred Issuance Common Stock to be issued to the Lenders will be subject to stockholder approval of Proposal No. 1 contained in this Proxy Statement and we expect will be issued as early as five business days after receipt of such stockholder approval.
In connection with the Transaction and pursuant to the Investor Rights Agreement, we implemented a new structure for our Board of Directors. As of the date hereof, the directors serving on the Board pursuant to the terms of the Investor Rights Agreement are as follows: (i) Alain Bellemare, Dwight James, Daniel Janki and Lee Moak, each designated by Delta; (ii) Adam Cantor, Zachary Lazar, Jeffrey Nedelman and Adam Zirkin, each designated by CK Wheels; (iii) Andrew Davis, who was designated by Cox; (iv) David Adelman and Timothy Armstrong; and (v) George N. Mattson, the Company’s Chief Executive Officer.
As of the Record Date, the Lenders collectively were entitled to vote approximately % of our Common Stock. Although CK Wheels own approximately % of the Company’s issued and outstanding shares as of the Record Date, it cannot vote more than 19.9% of the Company’s issued and outstanding shares at the Special Meeting as a result of restrictions on voting imposed on holders who may be deemed not to be a “citizen of the United States” pursuant to 49 USC § 40102(a)(15)(C) and Article X of the Certificate of Incorporation; the additional shares owned in excess of 19.9% by CK Wheels will not be counted as issued and
