NW to "make good" on series C stock from '93

[Don Smith]

Today's lesson boys and girls is...DON'T...TRUST...N...W...A...
Lets learn from our history lesson of 1993. Remember that sting attached to our stock after ten (10) years? History says that nwa are liars and cheats. There isn't an offer on the table that doesn't have some string attached. Trojan horse...looks pretty on the outside. Enough metaphors...OK one more, "somethings rotten in Denmark".

This is the same NW mgmt. team that refused to pay over the years, even when ruled against in a court of law.

Here's a question being asked a lot in my station: How will the 12% these accounts have been accruing factor in?
Finman: Working at NW makes you cynical? Surely you jest!

 

[Kev3188]

Straight from VP Bill Lentsch's mouth yesterday:

When asked about the interest accruing, he replied "don't plan on receiving that."

Take it for what it's worth....

 

[PurduePete]

Judge Gropper comes down with his ruling on the matter...

http://www.startribune.com/535/story/1159591.html

Union employees to get $277 million in NWA claims

Northwest Airlines workers represented by two labor unions will receive $277 million in unsecured claims against the company.

U.S. Bankruptcy Judge Allan Gropper in New York ruled Wednesday that the International Association of Machinists and Aerospace Workers (IAM) and the International Brotherhood of Teamsters were entitled to the claims, which are tied to preferred stock that the company granted the workers in 1993 in exchange for contract concessions.

"This court encouraged the parties to make the necessary sacrifices, but also to recognize that those making the sacrifices should be given a claim," said Sharon Levine, an attorney for the machinists union.

Gropper's ruling came over the objection of a group of investors.

The group, which holds claims against Northwest, argued that elevating the unions' claims to the same level as its own was improper and that other creditors would get 3 percent more on the value of their claims if the union's were disallowed.

Northwest granted the preferred shares to the workers when they took pay cuts 14 years ago in a deal meant to help keep the airline out of bankruptcy.

In 2003, the unions sought to force Eagan-based Northwest to repurchase the stock. The company refused and the unions sued.

In 2005, the unions won a judgment in New York state court against Northwest. In his Wednesday ruling, Gropper said that the law required him to recognize the state court's judgment.

Northwest said that granting the claims would substantially improve relations with labor and help the company resolve billions of dollars in duplicate claims.

An independent trustee will distribute the funds.

The claim affects Northwest flight attendants, ground workers and mechanics who were still holding shares of the preferred stock in 2003, when the airline did not buy back the shares at the agreed-upon price because of the carrier's financial difficulties. The flight attendants have a claim for $64.8 million, while the ground workers and mechanics have a claim for $212.5 million.

Northwest said Monday that it expects unsecured claims allowed in its bankruptcy case to be between $8.2 billion and $8.8 billion.

 

[exnw]

Judge Gropper comes down with his ruling on the matter...

http://www.startribune.com/535/story/1159591.html

Union employees to get $277 million in NWA claims




An independent trustee will distribute the funds.

The claim affects Northwest flight attendants, ground workers and mechanics who were still holding shares of the preferred stock in 2003, when the airline did not buy back the shares at the agreed-upon price because of the carrier's financial difficulties. The flight attendants have a claim for $64.8 million, while the ground workers and mechanics have a claim for $212.5 million


Does payment mean stock in the new NW or will it be a
cash distribution? Also my remaining shares are in my
NW 401k and I would prefer to have my distribution
directly into my 401k and then roll that over into
a fund of my choice. Hopefully that option will be
extended. Previous sales of the stock were placed directly
into this retirement fund.

 

[Kev3188]

According to my GC, they haven't yet decided wether or not the disbursement will be in cash form or more stock....

With a BK exit date of mid June, I would expect some sort of decision ASAP.

 

[PurduePete]

Here's why I do not want to receive shares in the "new" NW as repayment...

http://www.startribune.com/535/story/1161436.html

Delta shares fail to gain altitude

Northwest Airlines is likely to face similar business conditions when it leaves bankruptcy, a Thrivent analyst says.

Shares of the restructured Delta Air Lines didn't exactly soar Thursday, their first day of trading since the company emerged from bankruptcy this week.
The tepid reception -- Delta opened at $21.75 a share and closed at $20.72 -- provided the latest indication that the market's appetite for airline shares has cooled in recent months.

Bill Hochmuth, a senior research analyst for Thrivent Investment Management in Minneapolis, said the stocks of American, United and US Airways have fallen this year because of higher fuel prices, weakening demand for domestic air travel and a slowing U.S. economy.

Tough going awaits even shares of Delta and Northwest Airlines, which have slashed costs in bankruptcy.

"Delta is now coming out into that head wind," Hochmuth said. "Northwest will face that in a couple of months."

Northwest, which entered bankruptcy on the same day as Delta in September 2005, expects to leave Chapter 11 next month. Northwest has estimated that its new valuation will be $7.8 billion.

Based on Thursday's closing price, the market value of Atlanta-based Delta is now about $8.3 billion -- lower than the estimates Delta gave when it was fighting off a hostile merger bid from US Airways.

The initial US Airways' bid in November touched off a brief run in airline shares, as investors speculated that a wave of mergers would follow.

Bob McAdoo, a Prudential Equity Group analyst, was quick to rain on Delta's party Thursday, issuing a report saying the company's shares are overvalued. He set a target price of $14.

"Its shares are trading at levels, in comparison to its peers, that we believe are not sustainable," McAdoo wrote.

While Delta has been launched back into the publicly traded market, Northwest still has some hurdles to clear before it leaves bankruptcy protection.

A court-appointed examiner will issue a report to U.S. Bankruptcy Judge Allan Gropper this month after reviewing what steps Northwest took in determining its valuation. Some hedge funds have accused Northwest of undervaluing the company. The examiner was also expected to look at what talks and other communications occurred relating to the possibility of a Northwest-Delta merger while US Airways was pursuing Delta.

Northwest also must still receive court confirmation of its plan of reorganization. A hearing on the plan is set to begin May 16 in New York.

Some industry observers and airline employees still believe Northwest and Delta are headed for an eventual merger.

But Jamie Baker, an analyst for J.P. Morgan, wrote this week that many airline executives don't expect the industry to look seriously at merger options until the next business downturn.

"Our current view is that airline investors should not expect a quick return to the consolidation frenzy realized earlier this year, when industry stock prices increased by 30 percent" after US Airways' bid for Delta, Baker wrote.