Aloha Air loses financial
backer but still secures
critical funding

Faced with the loss of a key financial backer, Aloha Airlines said it has reached an agreement with two mainland companies for up to $65 million in new loans.

In an emergency motion filed in U.S. Bankruptcy Court on Monday, Aloha said Goldman Sachs Credit Partners LP and Ableco Finance LLC of New York have each agreed to provide $32.5 million to the cash-strapped airline.

Aloha Airlines, which filed for Chapter 11 reorganization in December, also said New York lender Matlin Patterson Global Opportunities Partners II LP recently withdrew its offer to provide $65 million in financing.

Aloha said it needs $10 million by the end of the month to meet expenses. It also said that the $65 million financing package will help it emerge from bankruptcy by July.

"Aloha believes that the debtor-in-possession facility will allow us time to implement our financial restructuring and our go-forward business plan," said company spokesman Stu Glauberman.

A Bankruptcy Court judge will hold a hearing tomorrow.

Glauberman declined to provide details about Matlin Patterson's withdrawal, saying it was a subject of a confidentiality agreement.

The airline said it contacted 45 potential lenders and investors and nine said they were willing to provide financing. Of the nine, Goldman Sachs and Ableco Finance provided the best terms, Aloha said.

Ableco Finance specializes in distressed companies. The company was formed by management of Cerberus Capital Management LP and Gabriel Capital Group. The new loan will be secured by priority liens on the company's assets.