Corporate raider Carl Icahn said yesterday that if Congress intervenes in his fight to gain control of Trans World Airlines Inc., it will have "far-reaching repercussions" that "entrench management" by discouraging hostile takeover bids for airlines.
Icahn, who is testifying today before the House subcommittee on aviation along with TWA President C. E. Meyer Jr., plans to urge Congress not to block his hostile $18-a-share bid for the company. During a 90-minute interview yesterday, Icahn said that if Congress intervenes in the fight, as TWA has requested, it will be reregulating an industry that has been deregulated.
"I'm going to make a statement that if Congress passes a law that holds me up for 90 days, it will have far-reaching repercussions," Icahn said. "If this occurs, I believe that nobody will ever go after an airline again, no matter how badly it is managed.
" . . . What they would be doing is giving TWA 90 days to dilute his 32.7 percent stake by issuing stock to a friendly third party. They would give TWA the opportunity to use this time to set up defenses or force me to sell my stock" to a third party that they choose. "If I sell my stock, the management will be entrenched, I will make a profit and the shareholders will get hurt . . . because the stock will drop to $12."
TWA stock closed yesterday at 18 1/2, down 1/8, with 539,000 shares traded.
Icahn said that if TWA management was really interested in selling the company to the highest bidder, they would sign a standstill agreement with him, in which he would agree not to purchase additional shares and they would agree to sell the company. A TWA spokesman said the company would not enter into such an agreement with Icahn because it wants to keep all of its options open.
"I believe that is all a fabrication," Icahn said. " . . . If they really want 90 days to find a buyer, why wouldn't they offer me a standstill agreement where everybody is equal and they would give up the right to dilute his stake in the company . Then, after 90 days, everybody sits at a table and the highest all-cash bid gets it TWA ."
TWA directors formally rejected Icahn's $600 million takeover bid last week, saying it "does not reflect full value." The company, the fifth-largest domestic airline, said it would submit Icahn's bid to shareholders after 60 days if it does not receive a superior offer and certain other conditions are met.
Icahn has purchased additional shares in the past week, raising his stake to 32.77 percent. While a Missouri judge has barred him from purchasing additional stock, Icahn said yesterday he was confident that ban would be lifted soon. If it is lifted, Icahn said he intends to "press on."
"I don't intend to be deterred in achieving our goal of acquiring TWA ," Icahn said. "I certainly intend to move along. . . . I'm also not saying at this point that I will be there in 60 days or 90 days with an $18 bid. I'm not going to wait. Why should I? . . . I am very serious about taking over TWA. I don't intend to stand still."
TWA insists that if Icahn gains control of the company, he will sell off airplanes and routes, which could lead to the loss of thousands of jobs. Icahn insisted yesterday that he does not intend to bust up the company if he gains control.
Icahn's Securities and Exchange Commission filings indicate that, if TWA's earnings and cash flow are not sufficient to repay the debt that would be added to the company's balance sheet to finance his proposed takoever, he would "explore alternative financing sources, including the possible sales of assets."
TWA had revenue of $3.7 billion and net income of $29.9 million last year, the company's first profitable year since 1980. The airline lost about $50 million from 1981 through 1983.
Icahn said yesterday that if he gains control of TWA, he would try to negotiate an agreement with the company's unions that would cut costs and offer employes an opportunity to share in the company's profits. He said TWA's major problem is its labor agreements, which he said make it one of the least efficient airlines.
"I think the airline industry is a good industry with a lot of growth potential," Icahn said. "I believe they TWA have a very bad contract with the unions and are a high-cost carrier. I think the unions would make certain concessions toward profitability, and if it could be worked out, then TWA would become extremely profitable, and I would not be against in some way sharing these profits with the unions."
Icahn, who needs a tremendous amount of capital to carry out his hostile takeover raids on major corporations, said he thinks TWA would generate excess cash flow of $400 million annually if he gained control and negotiated an agreement with the unions. But he is concerned that he may never get the chance.
"If they can get Congress to pass a 90-day standstill, they know they can force me out," Icahn said.