Ex-Hawaiian CEO got
less than $2M from sale
John Adams, the former chairman and chief executive of Hawaiian Airlines and its parent company, said he took in less than $2 million from the $41.4 million that majority shareholder AIP LLC received from a San Diego-based investment group.
Adams said yesterday that before the transaction he owned less than 2 percent of AIP, in addition to 274,005 shares in Hawaiian Holdings Inc. in his personal account.
He said he was left without any economic interest in the airline after Monday's deal in which a newly formed investment group of Ranch Capital LLC purchased 10 million shares from AIP. The deal included Adams' personal stake.
Adams, who resigned as the sole managing member of AIP, said that any perception that he walked away with more than $41 million from the transaction is untrue.
He said three other entities in AIP owned the remaining 98 percent of the group's stock in Hawaiian Holdings before the sale. He would not identify the other parties. Those entities now own the 4.2 million shares of AIP's Hawaiian Holdings stake that was not part of the deal. Hawaiian Holdings' stock has more than doubled this year and is up more than 1,200 percent over the past 52 weeks.
AIP, formerly known as Airline Investors Partnership LP, is a private investment company that was formed in 1995 by Smith Management Co. to invest in Hawaiian Airlines. It purchased the airline in January 1996 at a time when Hawaiian was on the brink of its second bankruptcy in three years.
Randy Smith is the principal of Smith Management while Adams is the president.
GCW Consulting CEO Mo Garfinkle, an adviser to Hawaiian Holdings and an industry analyst, said a middleman hooked up Smith Management and Ranch Capital for the transaction.
Garfinkle said the two companies had never done a deal before and that Lawrence Hershfield, founder and CEO of Ranch Capital, had never met Adams or Smith.
"Smith Management believes there's value in (Hawaiian Airlines), but they were more interested in getting the focus on Hawaiian Airlines and not on them," Garfinkle said.
Adams, who this week also resigned his positions with Hawaiian Holdings, is being sued for $28 million by Hawaiian Airlines trustee Joshua Gotbaum. Adams also is being investigated by the Securities and Exchange Commission for his involvement in a $25 million stock tender offer in 2002 that resulted in AIP receiving more that $17 million. The payout came at a time that the airline's financial condition was deteriorating.
Adams was removed from his Hawaiian Airlines positions by federal Bankruptcy Judge Robert Faris in May 2003, just two months after the airline filed for Chapter 11 reorganization because it was unable to restructure its aircraft leases with its primary lessor, Boeing Capital Corp.