US Airways and Blackstone Group

[Gilding the Lily]

Before DL filed for bankruptcy, they retained Blackstone Group as its advisors during the reorganization/restructuring phase. Once it filed its petition under Ch. 11 last year, Blackstone and DL filed its application to serve as the advisor during the bankruptcy process. Interestingly, in the application, Blackstone mentioned that it was currently advising 6 parties-in-interest, but did not release the names of those parties.

Does anyone know any of these parties-in-interest in regard to the M&A practice?

 

[BoeingBoy]

I assume you're wondering if US might be one of those parties-in-interest....

From the agreement between DL and Blackstone:

"Neither Blackstone Group Holdings LLC nor any of its affiliates shall (i) without the written consent of the Company, provide advisory services to any of the companies listed in the following sentence ("Competitors") similar to those provided to the Company under this Agreement during the term of this Agreement, or (ii) purchase, advise any third party regarding a purchase or otherwise participate in the purchase of the Company's or any of its subsidiaries' stock, assets, claims or securities without the prior written consent of the Company. For the purpose of this paragraph, Competitors shall mean only the following companies including their subsidiaries: AirTran Holdings, Inc., Alaska Air Group, Inc., America West Holdings Corp., AMR Corp., Continental Airlines, Inc., JetBlue Airways Corporation, Northwest Airlines Corporation, Southwest Airlines Co., UAL Corp. and US Airways Group, Inc."

Jim

 

[Gilding the Lily]

I assume you're wondering if US might be one of those parties-in-interest....

From the agreement between DL and Blackstone:

"Neither Blackstone Group Holdings LLC nor any of its affiliates shall (i) without the written consent of the Company, provide advisory services to any of the companies listed in the following sentence ("Competitors") similar to those provided to the Company under this Agreement during the term of this Agreement, or (ii) purchase, advise any third party regarding a purchase or otherwise participate in the purchase of the Company's or any of its subsidiaries' stock, assets, claims or securities without the prior written consent of the Company. For the purpose of this paragraph, Competitors shall mean only the following companies including their subsidiaries: AirTran Holdings, Inc., Alaska Air Group, Inc., America West Holdings Corp., AMR Corp., Continental Airlines, Inc., JetBlue Airways Corporation, Northwest Airlines Corporation, Southwest Airlines Co., UAL Corp. and US Airways Group, Inc."

Jim

Jim,

You shouldn't have made the assumption. Obviously, if Blackstone was advising US Airways, then upon the original offer made by Parker, a major conflict-of-interest would have been created (let alone the foolishness of advising a serious competitor). Furthermore, the bankruptcy code requires that professional groups advising the trustee must not hold an interest adverse to the estate and must be disinterested. Clearly, advising US would fail these requirements and, as such, would force Blackstone to either (1) drop US Airways or (2) drop Delta.

My inquiry was to determine what "parties-in-interest" Blackstone was currently advising. I am aware that those 6 parties have an interest in the Delta bankruptcy, but not enough of an interest to push Blackstone into the category of being adverse to the estate or being an "interested party." Their "disinterest" and non-adverse status is evidenced by the Court's final order (dated Dec. 15, 2006) allowing Blackstone to continue its advisement.

The reason I am asking is because of the rumors of fragmentation. Blackstone has advised, and is currently advising, many companies. Fragmentation generally involves many different parties, including many asset management companies, some of which could be current clients of Blackstone. Although I think it is unlikely, if fragmentation were to occur, then Blackstone may need to drop Delta because of a conflict of interest. More likely, however, if a conflict were to present itself, Blackstone would likely drop the other company (worth less $$$) in order to keep the "disinterested" status and, thus, keep DL. Which brings me to the original question... Who are the 6 "parties-in-interest?"

If we knew those parties, any decision by Blackstone to drop its representation of a certain company may be an ominous sign that fragmentation may occur.

 

[BoeingBoy]

Sorry for the erroneous assumption. As for who Blackstone might represent, after I found the info posted above I quit looking due to that faulty assumption. Don't know if the info is out there, but I'll see what I can dig up.

Jim