Takeover Bids Submitted for Eastern

THE JOURNAL RECORD, April 29, 1989 | Go to article overview

Takeover Bids Submitted for Eastern


NEW YORK (AP) - Billionaire hotelier Jay Pritzker and other suitors formally have submitted bids for strikebound Eastern Airlines, but the carrier remained locked Friday on its planned course of cutting operations and selling $1.8 billion in assets.

Another potential buyer surfaced Friday, with the release of a statement purportedly from a group of New York financial institutions indicating they were prepared to pay $1 billion for Eastern - but only if the deal included assets sold by the airline since its 1986 acquisition by Texas Air Corp.

However, a representative of the group later denied reports that the consortium actually had submitted a bid to the U.S. Bankruptcy Court and to Eastern's bankruptcy examiner. Harry Gotimer, an attorney representing the group, said a news release to that effect had been issued prematurely and the consortium still was formulating a proposal that had not been finalized.

Pritzker, the chairman of Hyatt Corp., informally offered around $500 million for Miami-based Eastern several weeks ago, according to sources close to the situation.

Jack Bavis, the head of Eastern's pilots union, told his membership late Thursday that Pritzker submitted a bid Wednesday to federal bankruptcy court, Eastern boss Frank Lorenzo, the airline's unions and major creditors.

Bavis also said Trans World Airlines Chairman Carl C. Icahn has requested confidential financial data on Eastern as a prelude to making an offer for the nation's seventh-largest carrier.

The statement from the consortium of New York financial institutions said the group had submitted an offer to the bankruptcy court and examiner David Shapiro that would provide more than $1 billion for ``acquisition and startup costs for Eastern Airlines and additional unspecified assets.''

The brief gave few details and Shapiro did not immediately return a call seeking confirmation of the proposal.

Gotimer said in a telephone interview that ``we represent a group that is seeking to put together a bid eventually.'' He would not identify any of the principals but said the group was still in the initial stages of creating its bid.

The statement said the offer would give the unions a substantial equity stake in Eastern with equivalent representation on the board of directors. The consortium would provide more than $500 million in working capital to fund the first six months of operation under the plan, the statement said. …

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