Last-minute plan
surfaces for airline
Rejected by the trustee of
Hawaiian Airlines, Jefferies & Co.
forges a lone plan for the carrier
A unit of investment banking firm Jefferies & Co., spurned by a last-minute change of heart by Hawaiian Airlines trustee Joshua Gotbaum, has filed one of several competing plans to reorganize the bankrupt carrier.
The company's proposal for Hawaiian was one of at least two submitted yesterday on the last day before a midnight deadline for filing plans. A previously announced plan also was filed yesterday by Gotbaum, the airline's unsecured creditors' committee and Hawaiian's parent Hawaiian Holdings Inc. The two proposals brought the number of vying plans submitted in the 17-month-old bankruptcy to four.
Madison Air Partners LLC, an entity of New York-based Jefferies & Co., filed what it called a "draft plan" after it received no response on a motion to extend the filing deadline for itself by another eight days. Madison sought the special treatment after Gotbaum changed his mind about picking the company as a partner in a reorganization plan for Hawaiian.
On Monday of last week, Madison was informed by the trustee and the creditors' committee that it had been chosen as a partner. But a last-minute sweetened offer from Hawaiian Holdings to guarantee full payment of Hawaiian's creditors prompted Gotbaum to switch allegiances on Wednesday night.
Madison said that it was left with only two business days to file a plan. But Gotbaum opposed the extension, claiming that Madison was aware that Hawaiian Holdings was still a potential partner. RC Aviation LLC, an investment group of San Diego-based Ranch Capital LLC, recently bought a major stake in Hawaiian Holdings.
"It is my job as trustee to propose the best plan for Hawaiian Airlines, and I think we have," Gotbaum said yesterday. "I decided to accept the Ranch proposal because it provided a full recovery for creditors, maintained value for the shareholders, and did so in a way that lessened the debt burden on Hawaiian Airlines."
As part of last week's improved proposal, Hawaiian Holdings bought aircraft lessor Ansett Worldwide's $107 million claim against the airline for an undisclosed reduced value, effectively settling one of the company's major debts and strengthening the trustee's joint plan for Hawaiian.
The plans filed yesterday join two other proposals for Hawaiian, filed by:
>> Aircraft lessor Boeing Capital Corp. and turnaround firm Corporate Recovery Group;
>> The Hawaiian Reorganization Committee, comprising some airline employees and small creditors; pilot Robert Konop; and the Hawaiian Investment Partners Group LLC, which is made up of investors and venture capitalists.
Jefferies' plan would give the firm 50.1 percent of the airline and creditors the other 49.9 percent of Hawaiian, canceling the existing stock. The plan potentially provides 100 percent payment for all creditors, but only if Hawaiian Holdings buys a 19.9 percent minority stake in the airline from the creditors. Hawaiian Holdings has a 60-day option to buy that stake.
Hawaiian Holdings' joint plan guarantees that all creditors will receive 100 percent of their claims, but treats aircraft lessors differently from other creditors. Under the parent company's plan, creditors can receive either all cash or a combination of 50 percent cash and 50 percent stock. Aircraft lessors have the 50-50 choice or can receive a long-term note.
"We are gratified we were able to reach agreement with the trustee and the creditors committee and look forward to reaching an agreement with labor as well as with Boeing," said Hawaiian Holdings Chairman Lawrence Hershfield, who also heads up RC Aviation.
Anil Patel, who negotiates leases for Boeing Capital with Hawaiian, said the aircraft lessor is evaluating the trustee's joint plan and hasn't decided yet whether it makes sense for the lessor.
Representatives of Hawaiian's three major unions all said they were taking a wait-and-see approach.
The competing parties have until Sept. 9 to modify their plans for Hawaiian.
