g159av8tor
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ACA Files Complaint Against Mesa Air Group
October 28, 2003 07:45:00 AM ET
Alleges United Airlines is Undisclosed Backer of Mesa's Consent Solicitation
DULLES, Va., Oct. 28 /PRNewswire-FirstCall/ -- Atlantic Coast Airlines Holdings, Inc. ("ACA" or the "Company") ACAI announced today that it has filed a complaint in the United States District Court for the District of Columbia alleging that Mesa Air Group, Inc. ("Mesa") MESA has made materially false and misleading statements and omissions in violation of federal securities laws in connection with its proposed consent solicitation and potential exchange offer. ACA is seeking from the Court, among other things, an order: requiring Mesa to correct its material misstatements and omissions; enjoining Mesa from disseminating its false and misleading proposed consent solicitation; and enjoining Mesa from making an exchange offer to ACA's stockholders. Among other things, ACA alleges that Mesa has failed to identify United Airlines, Inc. ("United") as a participant in the consent solicitation and in Mesa's proposed transaction, and also has omitted material information from its consent solicitation regarding (i) Mesa's financial position and its reason for proposing to acquire ACA; (ii) questionable trading in Mesa stock by Mesa's chairman and chief executive officer and other Mesa insiders shortly before the announcement of Mesa's takeover proposal; (iii) the inappropriate short-swing trades in which Mesa insiders have engaged; (iv) the self-dealing and lack of independence of Mesa's directors; and (v) the lack of independence of several of Mesa's nominees to ACA's Board of Directors.
More specifically, ACA's complaint alleges, among other things, that Mesa failed to disclose:
* That United is a participant in Mesa's consent solicitation and proposed transaction. ACA alleges that Mesa's proposed plan to acquire all of the outstanding shares of ACA's common stock is nothing more than an attempt by Mesa and its undisclosed backer, United, to (i) prevent ACA from establishing an economically viable, low-fare, low-cost airline based at Washington Dulles International Airport that would compete directly against United and Mesa and (ii) eliminate the significant
hurdle to United's efforts to emerge from bankruptcy that has resulted from its inability to negotiate an agreement for ACA to continue operating United Express for United.
On a conference call with securities analysts on October 7, 2003, Jonathan Ornstein, Mesa's chairman and chief executive officer, acknowledged contacting United prior to making its expression of interest to the ACA Board:
"We are partnered with United Airlines. When we announced that we had discussed it [Mesa's proposed acquisition of ACA] with United, United has [sic] reaffirmed the fact to us that they would like to ome to an agreement with Atlantic [C]oast, they [sic] would like to maintain that Atlantic [C]oast has a feed operation and to the extent [sic] that we could be involved in that decision it would be helpful."
* That Mesa is having problems financing additional aircraft purchases, a cornerstone of its growth plans. Mr. Ornstein has conceded, "Mesa's biggest challenge ... has been our ability to finance new aircraft."
ACA believes that Mesa is seeking control of ACA so that Mesa can gain the use of ACA's cash on hand, which is expected to reach over $200 million by year end. Mesa's desire to acquire ACA so it can use the Company's cash to resolve Mesa's own financial difficulties is material information that should have been disclosed to stockholders and the market.
* That Ornstein and other Mesa insiders sold a substantial number of Mesa shares in September 2003, shortly before Mesa announced its takeover attempt of ACA. These sales of Mesa shares by Mesa's directors just prior to the announcement of Mesa's proposed transaction involving ACA are in contrast to their ebullient view of Mesa's future, the prospects for a successful merger with ACA, and the advantages of such a merger asserted in Mesa public statements.
* That other questionable insider transactions produced short-swing profits subject to Section 16(b) of the Exchange Act, which requires a corporate insider to disgorge any profit from a purchase and sale (or sale and purchase) of any equity security of the issuer within any period that is less than six months.
* The self-dealing and lack of independence of Mesa's directors, who have determined that an acquisition of ACA would be in Mesa's best interest and are proposing a transaction in which the stockholders of ACA would receive shares of Mesa common stock. Seven of Mesa's nine directors have had, and ACA believes, continue to have, outside business relationships with Mesa, including highly lucrative consulting contracts, which compromise their independence and judgment. This information is material to the ACA stockholders because Mesa's proposed transaction would result in ACA stockholders exchanging their ACA common stock for Mesa common stock.
* That several of Mesa's nominees to ACA's Board of Directors suffer conflicts of interest that would impair their ability to fulfill their fiduciary obligations to ACA.
October 28, 2003 07:45:00 AM ET
Alleges United Airlines is Undisclosed Backer of Mesa's Consent Solicitation
DULLES, Va., Oct. 28 /PRNewswire-FirstCall/ -- Atlantic Coast Airlines Holdings, Inc. ("ACA" or the "Company") ACAI announced today that it has filed a complaint in the United States District Court for the District of Columbia alleging that Mesa Air Group, Inc. ("Mesa") MESA has made materially false and misleading statements and omissions in violation of federal securities laws in connection with its proposed consent solicitation and potential exchange offer. ACA is seeking from the Court, among other things, an order: requiring Mesa to correct its material misstatements and omissions; enjoining Mesa from disseminating its false and misleading proposed consent solicitation; and enjoining Mesa from making an exchange offer to ACA's stockholders. Among other things, ACA alleges that Mesa has failed to identify United Airlines, Inc. ("United") as a participant in the consent solicitation and in Mesa's proposed transaction, and also has omitted material information from its consent solicitation regarding (i) Mesa's financial position and its reason for proposing to acquire ACA; (ii) questionable trading in Mesa stock by Mesa's chairman and chief executive officer and other Mesa insiders shortly before the announcement of Mesa's takeover proposal; (iii) the inappropriate short-swing trades in which Mesa insiders have engaged; (iv) the self-dealing and lack of independence of Mesa's directors; and (v) the lack of independence of several of Mesa's nominees to ACA's Board of Directors.
More specifically, ACA's complaint alleges, among other things, that Mesa failed to disclose:
* That United is a participant in Mesa's consent solicitation and proposed transaction. ACA alleges that Mesa's proposed plan to acquire all of the outstanding shares of ACA's common stock is nothing more than an attempt by Mesa and its undisclosed backer, United, to (i) prevent ACA from establishing an economically viable, low-fare, low-cost airline based at Washington Dulles International Airport that would compete directly against United and Mesa and (ii) eliminate the significant
hurdle to United's efforts to emerge from bankruptcy that has resulted from its inability to negotiate an agreement for ACA to continue operating United Express for United.
On a conference call with securities analysts on October 7, 2003, Jonathan Ornstein, Mesa's chairman and chief executive officer, acknowledged contacting United prior to making its expression of interest to the ACA Board:
"We are partnered with United Airlines. When we announced that we had discussed it [Mesa's proposed acquisition of ACA] with United, United has [sic] reaffirmed the fact to us that they would like to ome to an agreement with Atlantic [C]oast, they [sic] would like to maintain that Atlantic [C]oast has a feed operation and to the extent [sic] that we could be involved in that decision it would be helpful."
* That Mesa is having problems financing additional aircraft purchases, a cornerstone of its growth plans. Mr. Ornstein has conceded, "Mesa's biggest challenge ... has been our ability to finance new aircraft."
ACA believes that Mesa is seeking control of ACA so that Mesa can gain the use of ACA's cash on hand, which is expected to reach over $200 million by year end. Mesa's desire to acquire ACA so it can use the Company's cash to resolve Mesa's own financial difficulties is material information that should have been disclosed to stockholders and the market.
* That Ornstein and other Mesa insiders sold a substantial number of Mesa shares in September 2003, shortly before Mesa announced its takeover attempt of ACA. These sales of Mesa shares by Mesa's directors just prior to the announcement of Mesa's proposed transaction involving ACA are in contrast to their ebullient view of Mesa's future, the prospects for a successful merger with ACA, and the advantages of such a merger asserted in Mesa public statements.
* That other questionable insider transactions produced short-swing profits subject to Section 16(b) of the Exchange Act, which requires a corporate insider to disgorge any profit from a purchase and sale (or sale and purchase) of any equity security of the issuer within any period that is less than six months.
* The self-dealing and lack of independence of Mesa's directors, who have determined that an acquisition of ACA would be in Mesa's best interest and are proposing a transaction in which the stockholders of ACA would receive shares of Mesa common stock. Seven of Mesa's nine directors have had, and ACA believes, continue to have, outside business relationships with Mesa, including highly lucrative consulting contracts, which compromise their independence and judgment. This information is material to the ACA stockholders because Mesa's proposed transaction would result in ACA stockholders exchanging their ACA common stock for Mesa common stock.
* That several of Mesa's nominees to ACA's Board of Directors suffer conflicts of interest that would impair their ability to fulfill their fiduciary obligations to ACA.
But, I guess a 2500 hr J41 Captain is already a big shot, so ............
