A day after bids were due for the assets of
Trans World Airlines, two new possible buyers emerged with plans to
purchase the bankrupt carrier.
Brian M. Freeman, an investment banker who previously advised
TWA's machinists' union, notified TWA that a still-forming entity
called TWA Acquisition Group is assembling an offer, according to
reports Friday in The Wall Street Journal and The New York Times.
The consortium has possible backing from Carl C. Icahn, TWA's
former chairman, and wants to keep TWA as an independent carrier,
the newspapers reported.
TWA Acquisition said it would bring $575 million in funding, the
minimum it must put up to top AMR Corp.'s American Airlines bid of
$500 million, plus the assumption of $3.5 billion in debt and lease
obligations.
Also, Global Airlines, a small New York holding company with no
operations that has twice offered to acquire Trans World Airlines,
made an offer Thursday for the bankrupt carrier. But the Global
offer was dismissed by experts as irrelevant.
"This is flying fruitcake stuff," said Michael Boyd, president
of the Boyd Group consulting firm in Evergreen, Colo.
TWA spokeswoman Julia Bishop-Cross said Friday the airline had
yet to receive a formal bid from either TWA Acquisition or Global.
Bids were due at U.S. Bankruptcy Court in St. Louis on Wednesday.
The Global bid is listed on the court's docket, however, and
Global chief executive Emil Bernard insists a copy was sent to TWA.
TWA Acquisition is skipping the bidding process and plans to
present a reorganization plan at a March 9 court hearing in
Wilmington, Del., to decide who gets TWA's assets.
A term sheet sent by TWA Acquisition to both TWA and American
said the group plans to refocus TWA's St. Louis hub, expand
operations at San Juan, Puerto Rico, and New York's John F. Kennedy
Airport and sell off excess gates and slots, the Journal reported.
The consortium would assume current labor contracts without
changes, or offer mechanics and pilots the option to adopt changes
in return for some stock in the reorganized company, the newspaper
said.
Freeman has been an advisor to the International Association of
Machinists and Aerospace workers, which has objected to American's
proposal because it fears losing seniority rights.
The Journal said Freeman had asked the union for its support,
but an IAM spokesman said Freeman was not working for the union and
that members had not decided whether to back his effort.
Procedures set up by the U.S. Bankruptcy Court in Delaware had
required the bids to be filed with TWA by Wednesday afternoon, with
copies sent to the court.
American announced its plans to bid for TWA on Jan. 10, the same
day the St. Louis-based carrier filed for bankruptcy.
Also bidding is Jet Acquisitions Group Inc., which offered $889
million for substantially all of TWA's assets. Illinois-based
Galileo International LLC also submitted a $220 million bid for
TWA's stake in Worldspan, a computer reservation system owned
jointly by TWA, Northwest and Delta airlines.
American's offer was the starting point in the bidding process
approved by the court. Other bidders had to offer at least $75
million more.
Both of Global's bids, worth $450 million and $570 million, fall
short of that guideline. Bishop-Cross said it would be up to the
court to decide if Global's apparent violations of the bidding
procedure would disqualify its offer.
Bernard said he expected the court would select Global's lower
offer, which is for all of TWA's assets expect those in Kansas City
and St. Louis. He said those assets, including TWA's hub, are what
American is really after.
"American (then) gets what American wants," Bernard said. "We
get everything else and start to become a major competitor against
American and United and that's what Congress wants."
The bids, however, are mostly in Global Airlines stock, which
Bernard said would start trading as soon as he is awarded the
airline's assets. The stock's value, he said, is based on those
assets.
"If you think Jet Acquisitions Group was mysterious, this is
even less credible," said Robert Milmore, an analyst at Arnhold
and S. Bleichroeder in New York.
Milmore said he still expects the court will select American's
bid, mostly because the airline is a known commodity.
Bernard said, if successful in acquiring TWA, he would merge the
assets of TWA with US Airways, which he said he's also trying to
buy. Officials at US Airways didn't immediately return calls for
comment.
But Boyd said if Bernard succeeds, "Elvis will be their first
passenger."
