Updated: January 11, 2008
FAQs Relating to the Securities of the Reorganized UAL Corporation (Ticker:UAUA)  |
FAQs Related to the Securities of the old UAL Corporation (Ticker:UALAQ.OB) 2008 Special Distribution Q & A | 1. | On what exchange is United's new stock listed? What is the new ticker symbol? | | | UAL is listed on The NASDAQ Global Select Market, and starting February 2, 2006 began trading under the ticker symbol "UAUA". |
| 2. | How can I purchase new United stock? | | | You may purchase new UAL stock under the ticker symbol "UAUA" in accordance with the rules and regulations of The NASDAQ Global Select Market, just as you would any other stock. You may wish to consult a professional broker if you are interested in purchasing new stock. |
| 3. | How many shares are being issued? | | | Under its Plan of Reorganization (“POR”), UAL Corporation will issue up to 125 million shares of common stock. Of this, the company will issue some 115 million shares to settle claims of the company's former unsecured creditors and employees. In addition, incentive plans for management and directors are authorized to issue up to 10 million shares of common stock.
As of December 31, 2006, approximately 108 million shares of common stock have been distributed to holders of unsecured claims. As of the same date, a total of 112 million shares of UAL common stock were outstanding. |
| 4. | Who is your transfer agent? | | | Computershare Investor Services
2 N. LaSalle Street
Chicago, IL 60602
(800) 919-7931
www.computershare.com
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| 5. | What is the company’s fiscal year? | | | The company operates on a calendar year, January 1 – December 31. |
| 6. | What is the new common stock's CUSIP number? | | | The new common stock's CUSIP number is 902549 80 7. |
| 7. | How do I obtain a copy of United’s quarterly earnings reports, annual reports and/or Proxy Statements? | | | Financial reports can be downloaded from our Investor Relations website at www.united.com/ir. Alternatively, please use our online request service to have a hard copy sent to you. |
| 9. | Where can I get information on the cost basis of the shares that were issued to me as part of the reorganization? | | | The company currently does not provide this information. The cost basis of the distributed shares is based on the value as of the date of distribution. Since shares have been distributed on numerous occasions since emergence, the company is unable to provide an estimate of the cost basis to individual shareholders. Holders of shares received as part of the reorganization should speak to the trustee and their tax advisor to determine the tax consequences of such distributions.
If you would like additional information about canceled United stock and/or the POR, it may be obtained from http://www.pd-ual.com, or by contacting the Debtors' Solicitation Agent by writing to: Poorman-Douglas Corporation, ATTN: UAL Balloting, 10300 SW Allen Boulevard, Beaverton, Oregon 97005, or by calling (877) 752-5527.
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| 10. | What is the tax basis of the distribution I received as a municipal bond holder and/or as an unsecured bond holder? | | | Holders of UAL bonds or debentures who received distributions should speak to the trustee and their tax advisor to determine the tax consequences of such distributions. |
| 11. | Where can I find out more information about the 5.0% Senior Convertible Notes due in 2021? | | | The Indenture and First Supplement to Indenture were filed with the SEC on February 1, 2006, and February 21, 2006, respectively (see Exhibit 4.3 of the 8k filed on February 1, 2006, and Exhibit 99.1 of the 8k filed on February 21, 2006). |
| 12. | Where can I obtain a selling questionnaire for the 4.50% Senior-Limited Subordination Notes due 2021, CUSIP 902549AD6 (also known as the “Employee Convertible Notes”)? | | | The Selling Securityholder Questionnaire / Notice of Registration Statement for this security were forwarded by the Trustee on March 15, 2007 to the Depository Trust Company for onward distribution to the holders. If you are a holder of this security and have not received the Questionnaire/ Notice, please contact UAL Investor Relations at investorrelations@ual.com or call 847 700-9838 to obtain a copy. |
| 13. | Why does UAL Corporation have a 5% ownership limitation under its current charter? | | | To avoid a potential adverse effect on the Company’s ability to utilize its NOL carry forward for federal income tax purposes, the Company’s amended and restated certificate of incorporation adopted a “5% Ownership Limitation,” applicable to all stockholders except the PBGC. The 5% Ownership Limitation remains effective until February 1, 2011 and can be waived only by prior written approval of the UAL Board of Directors. For more information on the 5% Ownership Limitation, please refer to the Company’s certificate of incorporation.
If the company were to have a change of ownership within the meaning of Section 382 of the Internal Revenue Code, under current conditions, its annual federal NOL utilization could be limited to an amount equal to our market capitalization at the time of the ownership change multiplied by the federal long-term tax exempt rate. |
| 14. | What does it mean that the common stock is canceled? | | | Pursuant to United's POR, old UAL common stock and preferred stock, including the company's shares that used to trade over the counter under the symbol UALAQ.OB, and the Trust Originated Preferred Securities were canceled as of February 1, 2006. No distribution was or will be made to holders of those securities and the canceled securities have no value.
If you would like additional information about canceled United stock and/or the POR, it may be obtained from http://www.pd-ual.com, or by contacting the Debtors' Solicitation Agent by writing to: Poorman-Douglas Corporation, ATTN: UAL Balloting, 10300 SW Allen Boulevard, Beaverton, Oregon 97005, or by calling (877) 752-5527. |
| 15. | Was my old UAL stock converted to new UAL stock? What is it worth? | | | No. As United had said would be the case for some time prior to its emergence, pursuant to the confirmed POR, old UAL common stock and preferred stock were canceled as of February 1, 2006, and no distribution was or will be made to holders of those securities. The canceled stock has no value. |
| 16. | What are the tax implications of owning canceled shares? | | | Holders of canceled stock should contact their tax advisor for more information about the tax implications. If you need confirmation of the number of old UAL shares you owned, please contact:
Computershare Investor Services
2 N. LaSalle Street
Chicago, IL 60602
(800) 647-4488
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| 17. | I'm a creditor - how do I find out if I will receive a stock distribution? | | | Only creditors with allowed general unsecured claims are entitled to a stock distribution. To confirm whether you have an allowed general unsecured claim, please call Poorman Douglas, at (877) 752-5527 with your claim number. They can confirm whether your claim has been allowed. |
| 18. | Can you provide me with historical stock split information for the old UALAQ stock since the Employee Stock Ownership Plan (“ESOP”) transaction of 1994? | | | On July 12, 1994, UAL stockholders approved a Plan of Recapitalization pursuant to which holders of the then outstanding common stock received one-half of a new share of common stock in exchange for each share they held. Additionally, holders also received a cash payment of $84.81 per share.
The stock price of the new shares as of July 13, 1994 was as follows:
High - $92.00
Low - $89.50
Close - $92.00
Subsequently, on May 6, 1996, UAL’s then outstanding common stock split four-for-one in the form of a 300% stock dividend. Accordingly, for each share held, stockholders received an additional three shares. These new shares began trading on May 21, 1996.
The pre-split stock price of the shares as of May 6, 1996 was as follows:
High - $214.00
Low - $209.50
Close - $209.625
The post-split stock price of the shares as of May 21, 1996 was as follows:
High - $59.375
Low - $59.750
Close - $59.00
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| 19. | Could you provide me with the official closing price of the old UALAQ stock on January 31, 2006, the last trading day before the stock was cancelled? | | | The UALAQ stock closed at $0.02 on January 31, 2006. |
| 20. | How much is the special distribution? | | | The distribution is $2.15 per share. If you own 100 shares, you will receive $215. |
| 21. | When will I receive it? | | | The special distribution will be made on January 23, 2008 to all shareholders of record as of January 9, 2008. Depending on where you hold the shares, you may not receive the funds on the payment date (January 23), since it may take a few days for the money to get to your specific brokerage account. If you own shares in a brokerage account at a brokerage firm, the distribution will be paid to the firm and the firm will distribute it to you according to your instructions. If you own shares directly in your own name (not through a brokerage firm), you will receive the distribution payment directly from our transfer agent, Computershare Investor Services. Computershare will mail a distribution check to your address of record as of January 9, 2008. The checks will be mailed via first class mail on January 23, 2008. Please allow 3 to 5 days for delivery. |
| 22. | Why is UAL calling this a distribution? Isn’t this a dividend? | | | Dividends are distributions that are made out of a company’s accumulated or current year profits as determined under the tax law. Any portion of the distribution that exceeds the company’s accumulated or current year’s tax profits, will not be taxed as a dividend.
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| 23. | If it isn’t a dividend, then what is it? | | | Under the tax law, any portion of a distribution that exceeds the company’s tax profits is first considered a return of capital and reduces the tax basis (but not below zero) of your UAUA stock. In the unlikely event that the amount of the distribution exceeds your tax basis, the remainder would be taxed as a capital gain. |
| 24. | How will I be taxed on this distribution? | | | UAL Corporation has determined that the January 2008 special distribution will be characterized as a return of capital for tax purposes. By January 31, 2009 shareholder who received the special distribution will receive a Form 1099-DIV reporting the distribution as a “Non-dividend Distribution”. This same information will be reported to the Internal Revenue Service. The Form 1099-DIV may come from your broker or mutual fund, or directly from UAL. Investors should consult their tax advisor if they have additional questions on the tax impact of the distribution. |
| 25. | When and how will shareholders be notified of the tax treatment? | | | Tax laws require that the tax characterization of your distribution be reported to you on form 1099-DIV no later than January 31, 2009 (The 1099-DIV may come from your broker or mutual fund or directly from UAL). |
| 26. | How should shareholders treat the special distribution for the purpose of estimated tax payments? | | | Because everyone’s tax situation is different, we recommend that you talk to your tax advisor about how to treat the distribution for purposes of making estimated tax payments. |
| 27. | Will my distribution be subject to withholding taxes? | | | Foreign Investors: The dividend portion will be subject to a 30% U.S. withholding tax under Code §§ 1441 and 1442 unless the rate is reduced or eliminated by an income tax-treaty between the U.S. and the respective country.
All Others: Generally, distributions are not subject to withholding taxes. An exception applies for shareholders who are subject to the backup withholding system. Backup withholding applies to all reportable payments in excess of $10 in any of the following situations:
- The payee fails to furnish their Taxpayer Identification Number (TIN) to the payor in the manner required;
- The Secretary notifies the payor that the TIN furnished by the payee is incorrect (would not normally happen until after the filing of the first 1099-DIV);
- There has been a notified payee underreporting for dividends and interest (involves the Secretary determining there has been a payee underreporting, the Secretary mailing at least 4 notices to the payee and, in the case where the payee has actually filed a tax return, a deficiency of tax attributable to such underreporting has been assessed). The Secretary may then notify payors of interest and dividends to withhold.
- Payee fails to certify that they are not subject to withholding for new accounts and instruments. This is generally where someone opens a new account at a brokerage and fails to provide a good TIN and the broker notifies us of this fact.
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| 28. | I held shares of UAUA as of the record date of January 9, 2008, but have not received the distribution. Who do I contact to ensure that I receive the distribution? | | |
If you hold shares through your brokerage or investment account, please contact your broker to ascertain why you have not received the distribution. If you hold your UAUA shares directly i.e. the shares are directly registered in your name and not in the name of your broker, please contact our transfer agent Computershare Investor Services at (800) 919-7931 or www.computershare.com.
If you are a United PDAP participant, please call the PDAP Service Center at (866) 687-7327. If you are a participant in one of United’s employee 401(k) plans at Fidelity, please call Fidelity Investments at (800) 245-9034.
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| 29. | I held shares of UAL before February 1, 2006. Will I receive the distribution? | | | No. Pursuant to United's POR, old UAL common stock and preferred stock, including the company's shares that used to trade over the counter under the symbol UALAQ.OB, and the Trust Originated Preferred Securities were canceled as of February 1, 2006. No distribution was or will be made to holders of those securities and the canceled securities have no value. |
| 30. | Are holders of convertible instruments issued by UAL entitled to receive the special distribution? | | | No.
Holders of the company's two convertible bonds - the 4.5% Labor Notes (CUSIP:
902549AH7) and the 5% O'Hare Notes (CUSIP:902549AE4) will not receive a direct
distribution but have a mandatory adjustment to the conversion rate in the event
of a cash distribution to all or substantially all holders of common stock.
Section 12.5(d) of the indentures for the two bonds provide the following formula
to determine the new conversion rate:
Adjusted
Conversion Rate
|
= |
Original
Converesion Rate |
X |
SP
SP - C |
i. SP = average of last reported sales prices of the common stock for the 10 consecutive trading days prior to the business day immediately preceding the record date for the distribution ($33.99 for the period December 21 to January 7)
ii. C = amount of the per share cash distribution ($2.15)
Based on the above formula, the company has determined that the new conversion rate and conversion price for the two convertible securities will be as follows:
| Security |
Conversion Rate |
Conversion Price |
| 4.5% Labor Notes |
30.6419 |
$32.64 |
| 5% O'Hare Notes |
22.7813 |
$43.90 |
Holders of the company's 2% Convertible Preferred Stock (CUSIP: 902549880) are not entitled to an adjustment in the conversion price for the preferred stock as certain trigger events have not occurred. |
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