The matchmakers behind the AMR-US Airways marriage

Thu Feb 14, 2013 8:59pm EST
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By Soyoung Kim and Nick Brown

NEW YORK (Reuters) - After sitting out the industry's last round of mega-mergers, airline giants AMR Corp AAMRQ.PK, parent of American Airlines, and US Airways Group LCC.N are finally tying the knot. Meet the matchmakers: the financial and legal advisers for AMR's unsecured creditors' committee in bankruptcy.

Jack Butler, the Skadden lawyer representing the creditor panel in AMR's Chapter 11 bankruptcy case, joined forces with investment bankers Gregg Polle and Bill Derrough from Moelis & Co to make sure AMR management - which was not exactly keen on a merger during the case - would give consolidation a fair shake.

The trio of advisers also served as the go-between whenever the two carriers wouldn't budge at critical junctures of negotiations, pitching compromise solutions that would work for both sides.

When AMR's three largest unions publicly announced their support for a merger with US Airways on April 20, the smaller rival also sent its first formal merger proposal to AMR and its creditors, people familiar with the matter said.

That undisclosed initial offer, which proposed AMR creditors and US Airways each own roughly half of the combined company, fell short of the eventual merger terms announced on Thursday and was largely ignored at the time, the people said. They did not want to be named because they were not authorized to speak to the press.

Under the $11 billion all-stock deal now approved by both companies' boards, AMR creditors are taking 72 percent of ownership in the merged company and US Airways shareholders the rest. [ID:nL4N0BE5N5]. AMR shareholders, once assumed out of the money, will get 3.5 percent of the reorganized stock, which could amount to between $350 million and $400 million, Butler said at a court hearing on Thursday.


Hostile takeover bids rarely succeed in bankruptcy. US Airways chief Doug Parker knows that first-hand from US Airways' failed hostile bid for Delta Air Lines (DAL.N: Quote) in 2007.   Continued...

The tail sections of a newly designed American Airlines aircraft (L), a US Airways aircraft (C) and a traditional American Airlines aircraft are lined up at Dallas-Ft Worth International Airport February 14, 2013. REUTERS/Mike Stone