Wednesday, December 20, 2006
US Airways continues to propose a takeover of Delta.
ATLANTA (AP) -- Delta Air Lines Inc. filed a reorganization plan Tuesday that calls for it to emerge from bankruptcy next spring as a standalone company worth as much as 12 billion, which would be more than the market value of the nation's two biggest carriers combined.
The Atlanta-based company also said that its board has formally rejected US Airways' 8.3 billion hostile takeover bid, and its executives joined rank-and-file employees on a full-scale public relations assault against the proposal.
"US Airways is the worst of all potential merger partners," Delta Chief Executive Gerald Grinstein said during a conference call with analysts.
Delta outlined a five-year business plan, and said that its advisers have determined that a reorganized Delta will have a consolidated equity value of roughly 9.4 billion to 12 billion. It said the plan would result in a recovery by Delta's unsecured creditors of roughly 63 percent to 80 percent of their allowed claims.
The high end of the equity value Delta is projecting would be more than the 11.6 billion in combined market value of AMR Corp.'s American Airlines and UAL Corp.'s United Airlines.
Delta's existing stock would be wiped out under the plan and creditors generally would receive distributions of new Delta common stock to settle their claims. Delta so far has not decided whether to give creditors any cash.
Offer
US Airways' offer included 4 billion in cash and 78.5 million shares of US Airways stock.
Tempe, Ariz.-based US Airways Group Inc. issued a statement saying it remains committed to its merger proposal, and it added it believes its proposal, including 1.65 billion in cost savings it anticipates, provides more value than Delta's plan.
"We remain a disciplined and determined bidder for Delta," US Airways Chief Executive Doug Parker said.
Creditors must now vote on whether to approve Delta's reorganization plan or any competing plan that may be filed with the court. The plan also must be approved by the court.