Filed by Mesa Air Group, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant Rules 14a-12 and 14d-2 of the Securities Exchange
Act of 1934
Subject Company: Atlantic Coast Airlines Holdings, Inc.
Commission File No: 0-21976
Press Release
Mesa Air Group Proposes Atlantic Coast Board Slate Committed to Act in
Shareholders' Interests; Intends to Commence Exchange Offer for ACA Shares
PHOENIX, Oct 14, 2003 (BUSINESS WIRE) -- Mesa Air Group, Inc. (Nasdaq: MESA)
today announced that it is filing a preliminary consent statement with the
Securities and Exchange Commission to nominate a slate of directors to replace
current board members of Atlantic Coast Airlines Holdings, Inc. (Nasdaq: ACAI).
The filing will enable Mesa to solicit written consents from ACA shareholders to
vote for seven highly qualified director nominees who, if elected, are committed
to acting in the best interests of all ACA shareholders.
Mesa also intends to commence an exchange offer for all outstanding shares of
ACA, and/or deliver a draft merger agreement to the board of ACA, that each
provide for the exchange of shares at a ratio of 0.9 of a Mesa share for each
outstanding share of ACA common stock.
Jonathan Ornstein, Chairman and Chief Executive Officer of Mesa Air Group, said,
"We are disappointed that we have not received a response from ACA management or
its board of directors to our October 6 letter outlining an acquisition proposal
for ACA. We have made a full and fair proposal to merge with ACA based on a
proven strategy that we believe will result in long-term profitability. Our
focused business model, based on revenue guarantee code share relationships with
major airlines serving hub networks, applied to an enlarged asset base and a
broader portfolio of client partnerships, will offer more balanced revenue
distribution and strong synergies. As the leading operator in the regional
aviation sector, we would have a stronger balance sheet and greater access to
capital to fund our combined growth. Employees of both companies would have a
stronger, more secure employer and greater advancement opportunities; our major
airline customers would benefit from our ability to provide lower cost services;
our shareholders an enhanced capital structure. Consequently, we believe that
both Mesa and ACA shareholders, who would receive shares of Mesa common stock in
the transaction, will benefit from our successful execution of this merger.
"Accordingly, we are taking steps to give ACA shareholders the opportunity to
replace existing directors with those who are committed to fairly considering
our offer or a similarly attractive alternative."
Based on the closing prices of Mesa and ACA common stock on Friday, October 3,
2003, the last trading day before announcement of the Mesa proposal, the offer
represented a 25% premium over the price of shares of ACA common stock on
October 3, and a 35% premium
to ACA's average trading price since July 28, 2003 the day ACA announced its
change in strategy.
In addition to replacing directors, Mesa will also seek written consent from ACA
stockholders to approve a resolution to repeal any by-laws or amendments that
have been adopted since the last date ACA's by-laws were filed with the SEC
(August 14, 1998).
Mesa intends to nominate the following seven independent individuals for
election as ACA directors:
o Nathaniel A. Davis, President and Chief Operating Officer, XO
Communications, Inc. from 2002 through June 2003; Director of XM
Satellite Radio Holdings Inc. and former director of XO
Communications, Inc.;
o Andre V. Duggin, Chairman of the Board of Directors and Chief
Executive Officer of A.V. Consultants, Inc., an insurance and risk
management company;
o Theodore F. Kahan, Senior Managing Director, El Camino Capital
Group, a real estate investment company; former Executive Vice
President of The Davis Companies;
o James R. Link, Consultant, JLink Associates, a financial/marketing
consulting firm; Chief Executive Officer of PAC/AV; and Chief
Executive Officer of TRW Investments, a venture capital firm; former
Vice President of Worldwide sales, Raytheon Aircraft Company;
o David T. McLaughlin, Chairman of the Board of Directors, Orion
Safety Products; Chairman of the American Red Cross; previous
President of Dartmouth College; Director of Viacom, Inc., Orion
Safety Products and Infinity Broadcasting;
o Peter F. Nostrand, Chairman of the Board of Directors, President and
Chief Executive Officer, SunTrust Banks, Inc., Greater Washington;
Former President of Crestar Bank Washington, DC and Crestar Bank MD;
and
o Archille R. Paquette, Retired President, Chief Operating Officer,
Air Midwest, Inc.
About Mesa Air Group
Mesa currently operates 150 aircraft with 938 daily system departures to 163
cities, 40 states, the District of Columbia, Canada, Mexico and the Bahamas. It
operates in the West and Midwest as America West Express; the Midwest and East
as US Airways Express; in Denver and the West as United Express; in Denver as
Frontier JetExpress until December 31, 2003; in Kansas City with Midwest Express
and in New Mexico and Texas as Mesa Airlines. The Company, which was founded in
New Mexico in 1982, has approximately
4,000 employees. Mesa is a member of the Regional Airline Association and
Regional Aviation Partners.
Certain Forward-Looking Statements
This press release contains various forward-looking statements that are based on
management's beliefs, as well as assumptions made by and information currently
available to management. Although the company believes that the expectations
reflected in such forward-looking statements are reasonable; it can give no
assurance that such expectations will prove to have been correct. Such
statements are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, projected or expected. The company does not intend to
update these forward-looking statements prior to its next required filing with
the Securities and Exchange Commission.
October 14, 2003
Board of Directors
Atlantic Coast Airlines Holdings, Inc.
45200 Business Court
Dulles, Virginia, 20166
Ladies and Gentlemen:
We are very disappointed that we have not received a response from
Mr. Skeen or the Board of Directors of Atlantic Coast Airlines Holdings, Inc.
("ACA") to our letter of October 6, 2003 outlining an acquisition proposal for
ACA. Specifically, we proposed that Mesa Air Group, Inc. ("Mesa") acquire all of
the outstanding stock of ACA in a tax-free transaction whereby Mesa would issue
0.9 of a share of its common stock for each ACA share of common stock. We now
feel compelled to direct this proposal to the ACA Board of Directors.
We have made a full and fair proposal to merge with ACA based on a
proven strategy of long-term profitability. Our focused business model, based on
revenue-guarantee codeshare relationships with major airlines serving hub
networks, applied to an enlarged asset base and a broader portfolio of client
partnerships, will offer more balanced revenue distribution and strong
synergies. As the leading operator in the regional aviation sector, we would
have greater access to capital to fund our combined growth.. Employees of both
companies would have a stronger, more secure employer and greater advancement
opportunities; our major airline customers would benefit from our ability to
provide lower cost services; our shareholders an enhanced capital structure.
Consequently, we believe that both Mesa and ACA shareholders, who would receive
shares of Mesa common stock in the transaction, will benefit from our successful
execution of this merger.
We and our advisors are prepared to send you a merger agreement and
promptly sit down to discuss all aspects of our current thinking on the terms
and structure of the transaction. We are committed to working with you to
negotiate a definitive agreement and to complete this transaction as soon as
practicable thereafter.
Although it is our desire to enter into direct discussions about
this transaction with you, because Mr. Skeen has not responded to my letter, we
are now taking steps to give ACA shareholders the opportunity to replace
existing directors with those who are committed to fairly considering our offer
or any similarly attractive alternative that they believe is in the best
interests of ACA shareholders. As you know, ACA currently has in place a "poison
pill" which effectively prevents us from consummating an exchange offer directly
with your shareholders. We therefore urge you to remove the "poison pill" and
allow your shareholders the opportunity to voice their opinion on this
transaction.
Because we have not yet received a response to our proposal, we are
filing with the Securities and Exchange Commission the necessary documents to
commence a shareholder consent solicitation to replace ACA's current Board of
Directors with independent directors who we believe will give fair consideration
to our attractive proposal. We also intend to file with the SEC an offer to
exchange Mesa shares directly with ACA shareholders.
Sincerely,
MESA AIR GROUP, INC.
/s/ Jonathan G. Ornstein
-----------------------------------------------
Jonathan G. Ornstein
Chairman of the Board & Chief Executive Officer
Additional Information and Where to Find it
More detailed information pertaining to the proposal by Mesa Air Group, Inc.
("Mesa") will be set forth in appropriate filings to be made with the SEC.
Investors and security holders are urged to carefully read the relevant
documents regarding the proposed transactions that will be filed with the SEC
because they will contain important information. You will be able to obtain the
documents when they become available free of charge at the website maintained by
the SEC at www.sec.gov. In addition, you may obtain documents filed with the SEC
by Mesa free of charge by requesting them in writing from Mesa Air Group, Inc.,
410 North 44th Street, Suite 700, Phoenix, Arizona 85008, Attention: Office of
the Corporate Secretary (602-685-4000).
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such jurisdiction.
Participants in Solicitation
Mesa and certain other persons named below may be deemed to be participants in
the solicitation of proxies. The participants in this solicitation may include
the directors and executive officers of Mesa. A detailed list of the names of
Mesa's directors and officers is contained in Mesa's proxy statement for its
2003 annual meeting, which may be obtained without charge at the SEC's Internet
site (http://www.sec.gov).
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As of the date of this communication, none of the foregoing participants,
individually beneficially owns in excess of 5% of Atlantic Coast Airlines
Holdings, Inc. ("ACA") common stock. Except as disclosed above and in Mesa's
proxy statement for its 2003 annual meeting and other documents filed with the
SEC, to the knowledge of Mesa, none of the directors or executive officers of
Mesa has any material interest, direct or indirect, by security holdings or
otherwise, in Mesa or ACA.