Delta Creditors Weighing Options
Thursday, December 21, 2006; 1:05 AM
ATLANTA -- The unsecured creditors committee in Delta Air Lines' bankruptcy case is hedging its bet. A key player in deciding the carrier's fate, the committee said it supports Delta's decision to file its stand-alone reorganization plan, but that it also will weigh alternatives.
Until Wednesday, the committee had been largely silent since US Airways' unsolicited $8.4 billion bid for Delta was disclosed on Nov. 15.
"A number of issues, including those left open in the plan of reorganization, will be the focus of continuing discussions between the committee and Delta over the coming weeks," the committee said in a statement. "At the same time, the committee will continue to consider potential alternatives in order to maximize the ultimate recoveries for the unsecured creditors in the Delta bankruptcy."
The committee did not elaborate on its carefully worded statement, and a lawyer for the committee, Daniel Golden, did not return repeated calls and e-mails seeking comment.
US Airways issued its own statement Wednesday saying the creditors committee has not decided whether to endorse Delta's plan and is continuing to evaluate US Airways' proposal. US Airways also said it would continue to work with the committee.
Analysts don't expect a quick decision from the committee on whether it supports actually confirming Delta's stand-alone plan, US Airways' buyout offer or any other bid that may come in.
Some believe it's likely US Airways will raise its offer, while other analysts aren't sure it's necessary right now. One thing most agree on: Delta has made clear its desire to remain independent.
Delta says in its plan that after bankruptcy it will be worth as much as $12 billion. Its unwelcome suitor, US Airways, says Delta's value is what it is offering to buy it for. Creditors must decide which proposal makes more sense.
Analysts differed Wednesday on whether Delta's valuation, which it announced in its reorganization plan a day earlier, is realistic in light of high fuel prices, the slowing economy and the airline industry's history in recent years of bad financial news.
Lehman Brothers analyst Gary Chase said in a research note Wednesday that he doesn't buy Atlanta-based Delta's projection that its equity value will be $9.4 billion to $12 billion when it emerges from bankruptcy next spring.
His firm believes the Delta plan is valued at $8 billion to $9.5 billion, which would put it in line with US Airways' offer when the Tempe, Ariz.-based company's promise of $1.65 billion in cost savings from the deal is factored in.
Ray Neidl, an airline analyst with Calyon Securities in New York, agreed immediate decisions aren't likely, but he also said he believes Delta's valuation projection is plausible.