Key bondholder group says AMR board should be replaced
By Nick Brown
NEW YORK (Reuters) - A group of some of bankrupt American Airlines' (AAMRQ.PK: Quote) most significant bondholders said it will not support a standalone restructuring unless a new board is brought in, a move that may increase hurdles for Chief Executive Tom Horton and his team.
The 12-member bondholder group, which includes JPMorgan Chase & Co (JPM.N: Quote), Pentwater Capital Management and York Capital Management, is the primary well-organized group to have expressed an interest in funding an independent exit for the airline's parent company AMR Corp.
AMR filed for bankruptcy in November 2011, seeking to reduce labor costs.
Entities that gain a controlling equity stake in a company through bankruptcy routinely appoint new boards, and those boards do not necessarily oust the company's incumbent managers.
But AMR's current management team, led by Horton who is also chairman of the board, has lost the confidence of the company's unions, which support a takeover bid by smaller competitor US Airways Group LCC.N.
The bondholders, who hold more than $700 million in AMR debt, said in the letter to Keith Wilson, president of American's pilots' union, its support for an independent exit was "conditioned, among other things, on that plan providing for the naming of a new board of directors."
It added that the new board would be selected with input from other shareholders.
That could include the pilots' union if the union votes to ratify a proposed labor contract offering it a 13.5 percent equity stake in the company, which means Horton's future at the company could depend on his ability to convince other shareholders of his team's leadership credentials. Continued...