Hawaiian plan would
pay off creditors
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MAKING IT WORK
Some key elements of pilot Robert Konop's plan:
>> Creditors will receive 100 percent cash, but can opt for stock.
>> Shareholders will have their stock swapped 1-for-1 for new shares of the company and can buy more shares at $5 apiece.
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Hawaiian Airlines pilot Robert Konop has filed a new reorganization plan for the bankrupt airline that could bring in up to $160 million in new capital and will pay off all debts in cash.
Separately, Hawaiian trustee Joshua Gotbaum and the pilots union took a big step toward resolving their differences yesterday when they jointly filed a motion seeking approval over two key financial issues. Gotbaum agreed to pay $4.25 million to the pilots' pension plan that had been due last September and also agreed to pay roughly $3.5 million to the pilots resulting from a deferred 2001 pay raise that was supposed to be paid at the end of last month.
"This is a big step for us," said Jim Giddings, chairman of the Air Line Pilots Association's Hawaiian Airlines unit. "It's a positive step along the way toward resolution of other issues we have."
Meanwhile, Konop's plan calls for no additional capital for Hawaiian since he believes that the airline's approximately $120 million in unrestricted cash is enough to meet its obligations. Creditors also could opt to receive stock. He said some claims, such as future aircraft lease payments, are years away and can be paid for with the airline's future earnings.
Konop's plan, though, does provide for the raising about $50 million if stockholders and employees don't fully exercise their right to purchase stock.
The plan provides an opportunity for Hawaiian employees to own up to 20 percent of the reorganized company through a 10 percent voluntary salary reduction. It also calls for parent company Hawaiian Holdings Inc.'s stock to be canceled and swapped 1-for-1 for shares in a new company.
Existing shareholders would have the one-time option of buying additional shares at $5 each, which potentially could raise $142.5 million from the company's 28.5 million outstanding shares. Another possible $25 million from 5 million available shares through the employee purchase plan would give the airline more than $160 million.
"The goal of this plan ... is to ensure the long-term viability of Hawaiian Airlines as a profitable corporate entity within the state of Hawaii," Konop said. "The associated business plan calls for improvement of interisland services to meet the needs of the people of Hawaii while providing Hawaiian with a likelihood of a profit in providing these services."
"What it comes down to is viability and the long-term plan of the company," Konop said.
BACK TO TOP
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Investors group would
drop lawsuit against
ex-CEO Adams
A San Diego-based investors group will kill a $28 million lawsuit against former Hawaiian Airlines Chief Executive John Adams and his investment affiliates if the group's reorganization plan is confirmed.
RC Aviation LLC, a group of 16 hedge funds formed by Ranch Capital LLC to invest in the airline, said in a Securities and Exchange Commission filing that it has no "current intention" to begin or assist with pending litigation against former majority shareholder AIP LLC; Adams; and Smith Management LLC, of which Adams is president.
"Our view is that we want to emerge from bankruptcy as a forward-looking company focused on the opportunities that the company has," said Ranch Capital CEO Lawrence Hershfield, who is spearheading the reorganization plan effort for RC Aviation. "We think that litigation will be expensive and we'd rather not have any ongoing baggage from the past ... if our plan prevails."
Hawaiian Airlines' bankruptcy trustee Joshua Gotbaum is suing Adams, AIP and Smith Management for $28 million by to recoup $25 million from a 2002 stock tender offer and $3 million in consulting fees.
RC Aviation, which last month became the top shareholder in airline parent Hawaiian Holdings Inc. by buying 10 million shares from AIP, said in the SEC filing that it has no "current intention" to begin or assist with litigation against Adams or his affiliated parties.
RC Aviation's investors, which were disclosed for the first time in the filing, include Lonestar Partners LP and Triage Capital Management LP, which were previously unsuccessful in getting the U.S. Bankruptcy Court to form a new committee so they could participate in the bankruptcy process.
Lonestar and Triage together own about 10 percent of Hawaiian Holdings stock in addition to their stake in RC Aviation, which holds nearly 35 percent of Hawaiian Holdings and voting control over AIP's 14 percent stake.