Hawaiian Airlines looks set to sell a controlling stake to a group of US east coast investors for $20 million, ending the carriers intensive search for additional capital which has been underway since its emergence from bankruptcy.
Hawaiian has declined to identify investors in the group, called Airline Investment Partnership, until conditions in a letter of intent are satisfied. Chief among those are changes in Hawaiian's contracts with some of its creditors and unions.
The deadline for investment was 8 December, with the deal giving the new investors six of 11 board seats and 18.2 million shares of new common stock, representing 60.9 per cent of all voting rights. Anticipating the need to bring in new investors, the shareholders had already authorised 20 million new shares, leaving 1.8 million still unissued. The letter of intent provides for a rights offering early in 1996 to existing shareholders, who could then increase their stake to 55 per cent. But AIP would retain its board majority.
The airline's improved performance may lead to its first profit since 1986, but it is suffering from a chronic shortage of capital. Hawaiian recently obtained yet another extension from American Airlines on late lease payments due on its DC-10s. The latest extension, for 21 instead of the normal 45 days, ends the day after the deadline for the investment.
Hawaiian's other reason for wanting new investors is to dilute the interests of foreign creditors, mainly aircraft lessors. Altering the share distribution has pushed Hawaiian up against the 25 per cent foreign ownership limit.
David Knibb
Source: Airline Business
