Former Missouri governor Christopher Bond revealed today that he has been retained by a group of Trans World Airlines Inc. employes to put together an employe buyout plan that would defeat the competing takeover bids for TWA submitted by investor Carl Icahn and Texas Air Corp.
While the employe group has not made an offer for TWA and has no binding financing commitments, one foreign lender "feels confident" he can raise $1 billion for a takeover bid, according to John H. Kreamer, a partner in the Kansas City law firm of Gage and Tucker, where Bond is also a partner.
Kreamer said the firm has been working for a week for a group of employes interested in purchasing the company. He said that as soon as financing commitments are obtained, "it would be our intention to make a tender offer for TWA and to negotiate with Carl Icahn for the purchase of his TWA shares."
Kreamer said one of the primary reasons for developing an employe buyout plan is to retain thousands of TWA jobs in Kansas City and St. Louis. He said TWA employes and others in the state are concerned that if either Icahn or Texas Air gains control of the company, the state will lose many jobs.
There has been speculation in the state that Bond may run for the U.S. Senate. By representing TWA employes in their effort to save jobs in Missouri, the former governor is improving his chances for a future political victory, one source said.
Bond and the TWA employes face several obstacles. Icahn already owns at least 45.5 percent of TWA's outstanding shares and has offered to buy the rest of the stock for a combination of cash and securities worth $24 a share. Texas Air entered into an agreement earlier this year to acquire TWA for cash and securities worth $23 a share.
Texas Air's deal was approved by TWA's directors, but it has not been approved by shareholders. Icahn has said he will vote against that deal, and with control of such a large block of TWA shares, he has the power to reject the competing bid.
The leaders of TWA's unions are supporting Icahn's takeover bid. Earlier this week, the leaders of two unions agreed after marathon negotiations with Icahn to accept wage concessions in return for a share of future profits. That was a major victory for Icahn, since TWA is considered to be a high-cost carrier.
The unions support Icahn and oppose the acquisition of TWA by Texas Air because of their past experience in labor negotiations with Texas Air and its chairman, Frank Lorenzo. Texas Air has declined to comment on whether it will pursue its bid for TWA, allow Icahn to proceed with his bid, or submit a new offer for the company. If Icahn acquires TWA, Texas Air would profit by selling the shares it already owns and by exercising the TWA stock options it holds.
The battle for control of TWA has put two of the financial world's toughest and most controversial negotiators, Icahn and Lorenzo, in the public spotlight. Meanwhile, TWA has kept a low profile recently, issuing no public comments on Icahn's takeover bid or the employe buyout plan. The company's spokesman has responded with "no comment" to questions regarding the recent developments.
The employes attempting the buyout hope the union membership will reject the wage concessions offered to Icahn, leaving the New York financier with a large stake in the company that he then might consider selling to them. They also have suggested that the wage agreements entered into with Icahn are not valid because he is not currently their employer.