CRAIG T. KOJIMA / CKOJIMA@STARBULLETIN.COM
Bruce Nobles, right, spoke last month at the Plaza Club downtown. Nobles, the former Hawaiian Airlines chief executive who is part of an effort to buy the bankrupt carrier, has a $1.5 million loan from Hawaiian that comes due next year.
Nobles owes
Hawaiian $1.5MThe carrier's former chief executive
says the loan is part of the reason he
has joined a reorganization effort
to purchase the bankrupt airline
Bruce Nobles, the former Hawaiian Airlines chief executive officer who is spearheading one of the reorganization efforts to buy the bankrupt carrier, has a $1.5 million loan outstanding from the company that will become due in February 2005.
The note, disclosed in a U.S. Bankruptcy Court filing, originated from the airline's September 1996 "rights offering" plan in which it raised $39.3 million in equity capital from shareholders and executives. Nobles said the loan played a part in him getting involved as the proposed CEO in a reorganization plan submitted in February by Boeing Capital Corp., the airline's primary aircraft lessor, and Corporate Recovery Group LLC, a turnaround firm from Wilson, Wyo.
"I think I have some legal defenses against the note and there are some other potential solutions which I thought about," said Nobles, who resigned from the airline in 1997. "It's an open issue. It certainly was one of the reasons for getting involved with this process." He noted that he has been following the bankruptcy closely because he also owns stock in Hawaiian.
The rights offering was part of the John Adams-led Airline Investors Partnership LP's investment in the airline in January 1996. The purpose of the rights offering was to raise capital after AIP invested $20 million in Hawaiian.
Under the rights offering, Hawaiian Airlines shareholders were given the opportunity to buy additional stock at a discounted fixed price. Hawaiian Airlines executives also were allowed to participate in the rights offering, but the company financed the executives' purchases with notes that allowed them to purchase stock at $3.25 a share without having to put up the money themselves.
The notes accrued interest at the prime rate while the company held onto the shares as collateral. Counting the interest, Hawaiian Holdings Inc.'s stock today would need to reach roughly $5 a share for the executives to break even. The stock closed yesterday at $3.90.
Seven executives still have loans due from the plan, according to the filing, worth a combined $2.4 million when the company filed for bankruptcy a year ago. That amount has risen over the past year because of interest.
Nobles, who pledged about $1 million for 300,000 shares of the company, owns 454,356 shares, or 1.6 percent of the company's 28.5 million outstanding shares.
Another 150,000 of his shares are options he received from a 1994 stock option plan. The remaining shares are in his 401(k) plan.
Despite his stock holdings in the company, Nobles said Boeing and Corporate Recovery Group had no choice in their reorganization plan but to propose canceling the existing shares.
"It's not an arbitrary issue," Nobles said. "If a company is insolvent, the stock has no value ... and Hawaiian has more debt claims that it has value."
Other former Hawaiian Airlines executives who have notes that will become due in February, the filing said, are Clancy Lyman, vice president-finance, treasurer and assistant corporate secretary, $249,100; James Davis, vice president of flight operations, $37,365; and Michael Loo, vice president-controller, $37,538. Glenn Taniguchi, who is Hawaiian's vice president of schedule planning, owes $37,365.
Some former executives have notes due in 2006 because they participated in the rights offering later on. They are: John Garibaldi, executive vice president and chief financial officer, $286,465; and Michael McQuay, executive vice president and chief operating officer, $249,100.
Garibaldi, a partner in the Hawaii Superferry project, said he recently sold his shares in the low $3 range after four months of negotiating with the company to get access to the stock.
