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Delta Panel May Ask US Airways to Extend Deadline (Update5)
By Mary Schlangenstein and Jeff St.Onge
Jan. 26 (Bloomberg) -- Delta Air Lines Inc.'s creditors may ask US Airways Group Inc. to extend the Feb. 1 deadline on its hostile takeover bid as they study competing plans for the bankrupt carrier's future, people familiar with the matter said.
The nine-member committee of unsecured creditors is split between those favoring a quicker payback of their claims through a US Airways merger and those who would benefit under a Delta plan to emerge from court protection as an independent company, said the people, who didn't want to be identified because the discussions are private.
US Airways wants the panel to urge Atlanta-based Delta to open its financial records and trigger a U.S. antitrust review. If the committee doesn't act by Feb. 1, the $9.67 billion offer expires, Chief Executive Officer Doug Parker has said.
US Airways probably would extend its deadline if the creditors ``said one single positive thing about the deal,'' said Jim Corridore, a New York-based analyst for Standard & Poor's. ``All they need to do is allow the process to continue. This is not a selection of one plan over the other.''
An extension would give the creditors' panel more time to debate US Airways' merger plan and Delta's bid to leave bankruptcy as a stand-alone airline by mid-2007, the people said.
The committee has ``not asked us for an extension of the deadline,'' said Kelly Sullivan, a spokeswoman for Tempe, Arizona-based US Airways.
``We continue to work constructively and collaboratively with the creditors committee and others involved in our Chapter 11 proceedings,'' said Betsy Talton, a Delta spokeswoman. She declined to comment on the possible extension request.
Parker's Plan
Parker has offered $5 billion in cash and 89.5 million US Airways shares for Delta, whose creditors would own 49 percent of what would become the world's largest airline. Delta's plan to remain independent values the airline at as much as $12 billion. Delta is the third-biggest U.S. carrier by traffic; US Airways is seventh.
US Airways and Atlanta-based Delta are both courting the creditors committee, which will help set terms for any bankruptcy exit. The panel is led by Boeing Co. and includes Coca-Cola Co.; United Technologies Corp.'s Pratt & Whitney, which makes aircraft engines; and Delta's pilots union.
The committee and its members face a Jan. 31 deadline to file objections to Delta's disclosure statement, which explains the airline's reorganization plan. A hearing on the document is set for Feb. 7.
Creditors
``There are several large creditors that have conflicts of interest in terms of their willingness or desire to work with Delta in the future,'' S&P's Corridore said in an interview. ``Their best interests may not line up with the best interests of the creditors not on the committee.''
A reorganization plan generally doesn't go to all of the airline's creditors for approval until it has the backing of the creditors committee. A judge can confirm a plan over creditor objections as long as it is fair and reasonable.
A separate committee representing 20 institutions that own $2.25 billion of Delta's debt urged the panel on Jan. 24 to begin talks with US Airways.
The bondholders ``are interested in maximizing the immediate return on their investment,'' said Eric Schaffer, a Pittsburgh-based bankruptcy attorney with Reed Smith LLP. Members of the creditors panel ``are looking at it from what is arguably a longer-term perspective.''
Delta estimates that unsecured claims against it would total $14.2 billion. The airline's September 2005 bankruptcy filing listed debt of $28.3 billion and assets of $21.8 billion.
Delta's 8.3 percent note due in 2029 fell 0.563 cent to 61.938 cents on the dollar today, according to Trace, the bond- price reporting service of NASD.
Shares of Delta rose 1 cent to $1.16 in over-the-counter trading. US Airways declined $1.73, or 3.2 percent, to $52.13 at 4:03 p.m. in New York Stock Exchange composite trading.
The case is In re Delta Air Lines Inc., 05-17923, U.S. Bankruptcy Court, Southern District of New York (White Plains).
To contact the reporters on this story: Mary Schlangenstein in Dallas at [email protected] ; Jeff St.Onge in Washington at [email protected] .
Last Updated: January 26, 2007 16:14 EST
By Mary Schlangenstein and Jeff St.Onge
Jan. 26 (Bloomberg) -- Delta Air Lines Inc.'s creditors may ask US Airways Group Inc. to extend the Feb. 1 deadline on its hostile takeover bid as they study competing plans for the bankrupt carrier's future, people familiar with the matter said.
The nine-member committee of unsecured creditors is split between those favoring a quicker payback of their claims through a US Airways merger and those who would benefit under a Delta plan to emerge from court protection as an independent company, said the people, who didn't want to be identified because the discussions are private.
US Airways wants the panel to urge Atlanta-based Delta to open its financial records and trigger a U.S. antitrust review. If the committee doesn't act by Feb. 1, the $9.67 billion offer expires, Chief Executive Officer Doug Parker has said.
US Airways probably would extend its deadline if the creditors ``said one single positive thing about the deal,'' said Jim Corridore, a New York-based analyst for Standard & Poor's. ``All they need to do is allow the process to continue. This is not a selection of one plan over the other.''
An extension would give the creditors' panel more time to debate US Airways' merger plan and Delta's bid to leave bankruptcy as a stand-alone airline by mid-2007, the people said.
The committee has ``not asked us for an extension of the deadline,'' said Kelly Sullivan, a spokeswoman for Tempe, Arizona-based US Airways.
``We continue to work constructively and collaboratively with the creditors committee and others involved in our Chapter 11 proceedings,'' said Betsy Talton, a Delta spokeswoman. She declined to comment on the possible extension request.
Parker's Plan
Parker has offered $5 billion in cash and 89.5 million US Airways shares for Delta, whose creditors would own 49 percent of what would become the world's largest airline. Delta's plan to remain independent values the airline at as much as $12 billion. Delta is the third-biggest U.S. carrier by traffic; US Airways is seventh.
US Airways and Atlanta-based Delta are both courting the creditors committee, which will help set terms for any bankruptcy exit. The panel is led by Boeing Co. and includes Coca-Cola Co.; United Technologies Corp.'s Pratt & Whitney, which makes aircraft engines; and Delta's pilots union.
The committee and its members face a Jan. 31 deadline to file objections to Delta's disclosure statement, which explains the airline's reorganization plan. A hearing on the document is set for Feb. 7.
Creditors
``There are several large creditors that have conflicts of interest in terms of their willingness or desire to work with Delta in the future,'' S&P's Corridore said in an interview. ``Their best interests may not line up with the best interests of the creditors not on the committee.''
A reorganization plan generally doesn't go to all of the airline's creditors for approval until it has the backing of the creditors committee. A judge can confirm a plan over creditor objections as long as it is fair and reasonable.
A separate committee representing 20 institutions that own $2.25 billion of Delta's debt urged the panel on Jan. 24 to begin talks with US Airways.
The bondholders ``are interested in maximizing the immediate return on their investment,'' said Eric Schaffer, a Pittsburgh-based bankruptcy attorney with Reed Smith LLP. Members of the creditors panel ``are looking at it from what is arguably a longer-term perspective.''
Delta estimates that unsecured claims against it would total $14.2 billion. The airline's September 2005 bankruptcy filing listed debt of $28.3 billion and assets of $21.8 billion.
Delta's 8.3 percent note due in 2029 fell 0.563 cent to 61.938 cents on the dollar today, according to Trace, the bond- price reporting service of NASD.
Shares of Delta rose 1 cent to $1.16 in over-the-counter trading. US Airways declined $1.73, or 3.2 percent, to $52.13 at 4:03 p.m. in New York Stock Exchange composite trading.
The case is In re Delta Air Lines Inc., 05-17923, U.S. Bankruptcy Court, Southern District of New York (White Plains).
To contact the reporters on this story: Mary Schlangenstein in Dallas at [email protected] ; Jeff St.Onge in Washington at [email protected] .
Last Updated: January 26, 2007 16:14 EST