Unofficial Vote Indicates "Overwhelming" Approval
Northwest Airlines announced its
creditors have "overwhelmingly approved" its reorganization plan,
another key step on its way toward emerging from bankruptcy
protection next month.
The unofficial vote tally shows that almost 97 percent of
creditors who voted approved the plan, the carrier said Wednesday.
Final results were expected to be filed in a New York bankruptcy
court later this week.
Doug Steenland, NWA president and chief executive officer, said,
"We appreciate our creditors' confidence in the Northwest Plan of
Reorganization, which provides creditors with a stake in Northwest
Airlines going forward and represents a substantial recovery on
their unsecured claims.
"Today's creditor approval is another step in Northwest's
efforts to complete its restructuring next month and to move
forward as a strong, fully-competitive airline. In recent weeks, we
have announced the composition of our new board of directors,
indicated a desire to list our new common stock on the New York
Stock Exchange and reported a first quarter profit, excluding
unusual and reorganization items, for the first time since
1998."
A confirmation hearing on NWA's reorganization plan is set for
May 16, and the carrier expects to emerge from bankruptcy in June.
It has been operating under bankruptcy protection since September
14, 2005.
Although creditors approved the plan, several parties have
objected to it. An example is the Owl Creek hedge fund, which wants
to block claims given to unions in exchange for pay cuts and other
changes that were negotiated during Northwest's reorganization,
according to the New York Times.
Another group that didn't give the plan its ringing endorsement
is the three biggest unions at Northwest Airlines. They objected
Monday, saying the plan to give executives almost 5 percent of the
company is" too rich," according to the AP.
The union objections came in response to disclosures that
Steenland would get $26.6 million in restricted shares and options
after the carrier exits bankruptcy, as ANN has reported. The
company had previously disclosed that its top 400 executives would
get almost five percent of the company, but disclosed actual
amounts last Friday.
The plan provides for secured creditors to be paid in full;
unsecured creditors are expecting between 66 cents and 83 cents on
the dollar, which will be paid in shares in the newly reorganized
company and depends on the final amount of debt.
Northwest added that upon the effective date of its Plan of
Reorganization, the outstanding common stock and the preferred
stock of the company will be cancelled for no consideration... and,
therefore, the company's existing stockholders will no longer have
shares in the company, unless they purchase new shares.
The carrier has also filed an application with the New York
Stock Exchange to trade its new common stock under the ticker
symbol "NWA" after the airline emerges from Chapter 11 bankruptcy
protection.
NWA said last week it had resolved objections by a group of
investors who hold claims in the bankruptcy. They objected to
several parts of the plan, such as its requirement that two-thirds
of shareholders approve any changes to the company's certificate of
incorporation and bylaws. NWA then changed the two-thirds vote to a
simple majority and won the support of the investment group.
Northwest is expecting to have a valuation of about $7 billion
when it emerges from bankruptcy, plus another $750 million from the
sale of new shares. In court filings it has projected 2007 revenue
of $12.77 billion and a net profit for the year of $794
million.
"We appreciate our creditors' confidence in the Northwest plan
of reorganization, which provides creditors with a stake in
Northwest Airlines going forward and represents a substantial
recovery on their unsecured claims," Steenland said.