Creditor's Committee seek adviser on (US Airways') Delta takeover moves

[Twicebaked]

US Daily
Friday December 22, 2006

UNOFFICIAL CREDITORS PANEL URGES DELTA TO CONSIDER OPTIONS
Seventeen creditors who hold $2.25 billion in unsecured claims against Delta Air Lines Inc. in its bankruptcy case urged the carrier today to consider alternatives to its standalone reorganization plan. The 17 creditors, who form an unofficial committee of unsecured claim holders, said that while they appreciated Delta's progress to date in its restructuring efforts, the committee "expects Delta to consider methodically, proactively and fairly strategic alternatives to its proposed stand-alone Chapter 11 plan to ensure that creditor recoveries are maximized in the Chapter 11 process."

That committee is separate from the official committee of unsecured creditors in Delta's bankruptcy case, which has a key role in deciding Delta's fate.
The official committee has said it supports Delta's decision to file its standalone reorganization plan on Tuesday, but will also weigh alternatives.

Today’s statement follows a webcast by US Airways Chairman Doug Parker Thursday calling Delta’s valuation of its reorganization plan “out of whack†and challenging other claims Delta has made since filing the standalone plan. You can hear the webcast by going to awaCompass and theHub (and clicking on the webcast link on the home page), or see the recap in this week’s AboutUS, published this morning.

In a related development, the Financial Times reports that Delta’s official Creditors Committee will name former Continental Chairman Gordon Bethune as an adviser to evaluate the competing claims for Delta. Our view? Mr. Bethune brings a great deal of experience, credibility and independence to the process. We believe the committee will be well-served by his leadership and decisiveness, and we’re confident that Mr. Bethune and the committee will ultimately recognize the value the “New Delta†will create.
Reports from Associated Press, Dec. 22; Financial Times, Dec. 21

 

[USA320Pilot]

US Airways slams Delta's valuation, 'severely flawed' antitrust argument

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Regards,

USA320Pilot

 

[Twicebaked]

By Paritosh Bansal

NEW YORK, Dec 22 (Reuters) - A group of Delta Air Lines' creditors, including Deutsche Bank Securities and Lehman Brothers, urged the carrier on Friday to consider options besides its plan to exit bankruptcy independently.
Delta (DALRQ.PK: Quote, Profile , Research), which has been operating under Chapter 11 protection since September 2005, earlier this week filed a plan of reorganization that would see it emerge from bankruptcy as an independent carrier, and rejected an $8.3 billion takeover offer from US Airways Group (LCC.N: Quote, Profile , Research).


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The carefully crafted comments from the creditor group, whose members hold about $2.25 billion in unsecured claims against the airline, suggest Delta should look at partnerships, indicating the No. 3 U.S. airline has not convinced creditors that its own plan is the best alternative.
The creditor group includes bondholders, hedge funds and other investors who banded together in an ad hoc group, seeking a greater say in Delta's future, soon after US Airways' Nov. 15 bid. The group is known as the Unofficial Committee of Unsecured Claimholders.

All unsecured creditors of the airline are represented by a nine-member court-approved official committee.

In a sign of its seriousness, the official creditor committee said that it wants to hire former Continental Airlines (CAL.N: Quote, Profile , Research) Chief Executive Gordon Bethune as a consultant, according to a bankruptcy court filing. Continued...


Who was it that said that fat lady sang???????

 

[Gilding the Lily]

I also posted this in the DL forum; but I also wanted to hear any remarks in this forum.

I don't think Bethune will be able to accomplish much with his so-called "advising;" but there is one thing I think he can accomplish: Help certain creditors put pressure on DL to file pre-merger notification forms with the government.

This does not mean that DL would seriously consider the merger; but it would initiate an in-depth official review of the potential merger. This, of course, means that the so-called "murky" anti-trust issues could be cleared up in the several weeks following the filings and, thus, would give a clear view of what divestitures would be required to get the deal done.

As you have noticed in my past postings, I disagree with DL's characterization of the the deal being severely "anticompetitive." While it is true that the two carriers compete in many routes, the notion that antitrust problems make the deal a "nonstarter" is ridiculous.

If it is a non-starter, then it begs the question: What is the harm in filing the pre-merger notification forms? If it was a non-starter then why not file the per-merger forms and have the DOJ kill the merger right from the start? That would put to rest all the merger talk with US right? To me, it is apparent that the potential merger is not a "nonstarter" as DL would suggest. So, to clear up the matter, DL should file the per-merger forms now... isn't it in the best interest of the creditors to at least know what they are dealing with?

 

[Gilding the Lily]

Today, the Official Creditor's Committee filed a notice to the court stating that no parties to the DL bankruptcy have objected to the appointment of Bethune, even after the subsequent disclosures of potential conflicts-of-interest. The Judge officially entered an order approving of Bethune's retention. Now the committee can start an official review under his advisement.