UNC Resources Inc. stronly hinted yesterday that it may pursue a hostile takeover bid for control of Western Airlines.
What appeared to be an initially polite exchange between the two companies had dissolved into a heated war of words with an exchange of letters this week. UNC's hint of a hostile turn in the merger bid came in a response to a letter sent to UNC Monday by Western President Dominic P. Renda -- released to the press Sunday -- in which Renda called UNC's actions "bizarre" and urged UNC to halt its plans to merge with Western.
Keith A. Cunningham, president and chief executive officer of UNC, a Falls Church energy company, told Renda in a sternly worded letter he was "shocked and disappointed" by the contents and tone of Renda's letter.
Cunningham referred to "several misstatements of fact" in Renda's letter and said that Western's shareholders had been "poorly served by the letter's gratuitously hostile tone and the manner of its release. . ."
"In the changed atmosphere engendered by your letter, we must advise you that we have been compelled to reconsider all the terms of our preliminary proposal to your . . . ," Cunningham wrote. "The structure and terms of a friendly transaction are not necessarily the same as those effected in an atmosphere of hostility. This is an unfortunate fact of life."
Cunningham said UNC now intends to review carefully "its several options" with a view to presenting an appropriate proposal to Western and its shareholders for a combination of the two companies.
Although the letter did not specify, the options could include buying Western stock on the open market (UNC now holds 4.9 percent of Western's stock); a direct proposal to Western shareholders, who have not yet voted on Western's agreement to merge with Continental Airlines, and a proxy fight.
UNC, a holding company for United Nuclear Corp., a diversified energy company with important uranium and coal interests, gave no indication of giving up on its pursuit of Western. Cunningham said UNC was "totally serious" that the two companies should merge.
UNC has already disclosed that Dan A. Colussy, former president of Pan American World Airways, will take the helm at Western if it is acquired by UNC.
Until now, UNC's pursuit of a merger with Western has been of a friendly nature, seeking to talk with Western officials about an offer that UNC had said would provide Western shareholders with a combination of cash and UNC securities that would yeield them about a 50 percent premium above the last several months' average market price of Western's stock.
Although Renda complained that UNC had not put forth a proposal in a meeting with Western's investment bankers, Cunningham complained yesterday that it had been clear at the meeting that Western's instructions to its bankers "precluded an interchange of views" about a merger proposal. He also called "imprudent" Renda's statement that he failed to see how UNC could formulate "any proposal" that could better serve the long-term interests of Western's employes and shareholders than the Continental-Western combination.
"We must . . . assume that you recognize the overriding fiduciary obligation to your shareholders to give good faith consideration to any acquisition proposal which might be of greater benefit to them," Cunningham wrote.
In a related development, Continental threatened UNC with legal action if it persisted in its attempt to acquire Western. In a letter to Cunningham, Continental President A.L. Feldman said that UNC's conduct "may constitute intentional, willful and tortious interference with the contractual relations" between Continental and Western.
Continental "will not tolerate any disregard" and is "prepared to aggressively pursue its legal rights" unless UNC abandons its efforts to merge with Western, Feldman wrote.