Fenwick & West Represents Virgin America in Capital Restructuring Following DOT Clearance, Obtaining $68.4M Debt Financing

January 12, 2010

Fenwick & West LLP represented its client Virgin America, a privately-held domestic airline, in a series of capital restructuring transactions, which enabled the Company to continue to operate as a U.S. certified air carrier in accordance with Department of Transportation's (DOT) regulations and raised substantial new capital for the company.

On January 8, 2010, the DOT issued a ruling that Virgin America, following the restructuring transactions, will remain fully compliant with U.S. ownership laws, which requires that domestic airlines remain under the control of U.S. citizens, with no more than 25% of the voting stock being held by foreign citizens.

In early 2009 Virgin America competitors initiated a regulatory proceeding before the DOT which sought to revoke the airline's status as a U.S. certified air carrier following exercise of certain put rights by the Company's prior investors. After negotiations with Virgin Group (the company's minority owner), prior investors, potential new investors and DOT officials, the company brought in new investors and revised its ownership structure to continue operating as a certified air carrier in accordance with the U.S. citizenship requirements.

The new ownership structure transfers majority ownership to Cyrus Capital and a consortium of additional domestic investors, including board members Donald Carty, former American Airlines CEO, Sam Skinner, former Secretary of Transportation and David Cush, the company's CEO. The new structure also allows Virgin America employees to participate in appreciation in the company's equity through the creation of a special purpose vehicle that holds a portion of Virgin America's common stock.

In addition, as part of the proposed transaction, Virgin America made substantial revisions to its governance and control documents and obtained an additional $68.4 million in unsecured debt from its shareholders. In 2007 and 2008, Fenwick represented Virgin America in several rounds of financing, raising over $500 million in debt and equity – the most ever for a new domestic airline.

The Fenwick & West team advising the company in connection with the restructuring, which was led by corporate partner David Bell and senior corporate associate Matt Rossiter, included corporate partner Gordon Davidson; corporate associates Ryan Hayes and Ruomu Li; executive compensation and employee benefits partner Scott Spector and associates Liza Morgan and Nicholas Frey; tax partner Adam Halpern; and corporate paralegals Lorraine Cereno and Jeannine Hensley.

EDITORS NOTE: Virgin America is a U.S.-controlled, owned and operated airline. It is an entirely separate company from Virgin Atlantic. Sir Richard Branson's Virgin Group is a minority share investor in Virgin America.

About Fenwick & West

Established in 1972, Fenwick & West provides comprehensive legal services to technology and life sciences clients of national and international prominence. Fenwick & West is committed to providing innovative, cost-effective and practical legal services that focus on global technology industries and issues. We differentiate ourselves by having a deeper understanding of our clients' technologies, industry environments and business needs than is typically expected of lawyers.

Press Contacts:

David A. Bell
Partner, Corporate Group

Matt Rossiter
Senior Associate, Corporate Group

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