American Airlines parent sees 'reasonable possibility' of shareholder recovery
BY DAVID MCLAUGHLIN Bloomberg News
Thursday, January 10, 2013
1/10/13 at 7:02 AM
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Original Print Headline: AMR hints at recoup for shareholders
AMR Corp., the bankrupt parent of American Airlines, says its value has "significantly appreciated" and there may be a recovery for shareholders, who generally receive nothing in bankruptcy cases.
Shares of AMR, which is considering a merger with US Airways Group Inc., rose 44 percent Wednesday to finish at $1.30 in over-the-counter trading, which encompasses stocks that are not listed on an exchange.
Wednesday's closing price was the highest since Nov. 28, 2011, the day before the Fort Worth-based airline sought bankruptcy protection.
"Depending upon the ultimate strategic alternative adopted and pursued, there exists a reasonable possibility that there may be value for AMR equity holders," AMR attorney Harvey Miller wrote in a Jan. 3 letter to the Office of the U.S. Trustee, which monitors bankruptcy proceedings. The document was filed Tuesday with the U.S. Securities and Exchange Commission.
AMR's $460 million of 6.25 percent convertible notes due in October 2014 climbed 3.9 percent to 96.25 cents on the dollar Wednesday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds traded at 17.75 cents after AMR filed for Chapter 11.
Tempe, Ariz.-based US Airways has been pursuing a merger with AMR since shortly after the larger carrier filed for bankruptcy.
AMR had a board meeting Wednesday at which it had hoped to be ready to decide whether to go ahead with a tie-up, people familiar with the matter said in December.
Bruce Hicks, an American spokesman, declined to comment on the specifics of the airline's board meeting, beyond citing CEO Tom Horton's comment in a Jan. 3 message to employees that "we expect to bring this to a conclusion within a matter of weeks."
"The U.S. Trustee could conceivably appoint an equity committee, although this late in the bankruptcy process, it would be quite rare," Helane Becker, an analyst with New York- based Dahlman Rose & Co., said in a report today.
A combination of American, the third-largest U.S. carrier, and No. 5 US Airways would create the world's largest airline.
Shares of US Airways fell 0.2 percent to $15.13.
Miller, of law firm Weil, Gotshal & Manges LLP, wrote in the letter that AMR previously opposed the formation of an equity committee in the bankruptcy case to represent shareholders because "there did not appear to be a substantial likelihood" that they would receive "any meaningful distribution."
"Since January of 2012, the debtors have made remarkable progress in stabilizing their businesses and improving their prospects," he wrote.
Miller was not available for comment Wednesday.