TPG Selling Midwest Airlines to Republic Airways

CHICAGO (Reuters) – Republic Airways Holding Inc.  said on Tuesday it would buy Midwest Airlines from private equity group TPG Capital for $6 million in cash and a $25 million note.

In addition to getting all of Midwest’s equity, Republic will receive TPG’s $31 million secured note.

After the completion of the deal, TPG may convert its $25 million five-year note to RJET stock at $10 per share. TPG also will have the right to nominate a member to Republic’s board of directors.

The deal comes a day after Republic said it would buy bankrupt U.S. regional carrier Frontier Airlines Holdings Inc (FRNTQ.PK) for $108.75 million.

“This acquisition will enhance the strategic positioning of Republic Airways,” Republic Chief Executive Bryan Bedford said of the Midwest purchase.

Under the agreement, Midwest will become a unit of Republic, flying under its own name. Midwest’s Boeing 717s will be replaced with Embraer (EMBR3.SA) 190 aircraft, Republic said in a statement.

Wisconsin-based Midwest was bought by TPG in 2008 after rejecting a bid from rival AirTran Holdings Inc (AAI.N). Midwest flies to destinations throughout the United States.

Republic, which is based in Indiana, owns Chautauqua Airlines, Republic Airlines and Shuttle America.

Republic shares gained 46.59 percent, or $1.91, to $6.01 on Nasdaq.

(Reporting by Kyle Peterson; editing by Andre Grenon)