N.Y. Firm Plans Tender Offer for Pan American Corp., Airline’s Parent
Towers Financial Corp., a company that owns debt collection agencies and insurance companies, said Monday that it planned to make a tender offer for Pan American Corp., parent of Pan American World Airways.
But neither the airline, its five Pan American unions from which Towers is seeking major concessions nor financial analysts seemed to take the offer very seriously.
Towers, which has been trying to make a run at the airline subsidiary for several weeks, also identified, for the first time, Abraham Hirschfeld, a New York real estate magnate, as initiating the efforts.
And it said that it had retained as consultants such prominent names as former Atty. Gen. John Mitchell and former President Richard M. Nixon’s brother, Edward, as consultants. Towers also said it hopes to enlist former Federal Reserve Board Chairman Paul A. Volcker.
In a 13-D filing with the Securities and Exchange Commission, Towers said it owned about 100,000 shares of Pan Am, which it acquired on the open market in the last 45 days at prices ranging from $3.50 to $3.75 a share.
In its filing, Towers said it would offer Pan Am shareholders a newly issued class of preferred stock with a preferred dividend of 6%. It did not put a dollar value on the offer.
Towers did not say how many shares of Pan Am it sought to purchase in the tender offer. It also did not identify any investment banking houses that might be arranging the financing for such an offer.
Hirschfeld, reached in Miami where he owns a hotel, said he had told Towers: “I will do whatever I have to do.”
Although declining to specify how much he planned to invest, he said: “I could invest between $20 million and $50 million. I have the money.”
A Polish-born naturalized citizen who lived in Israel until 1950, Hirschfeld said he was interested in Pan Am because “it is like the American flagship. It is like British Airways. It is like Lufthansa, and it should not go sagging. Not having been born in this country, I probably appreciate that more than other people.”
Towers Chairman Steven Hoffenberg said Monday that he is currently interviewing investment houses and that they are interviewing him. He declined to identify the houses.
Hoffenberg said that in order to accomplish its objective, Towers needed concessions from the unions totaling $180 million.
He predicted that Pan Am is going to lose $100 million in 1987. With the concessions, he said, Pan Am could earn $80 million next year.
Though one union, the Teamsters, has supported the Towers attempt, the others are “skeptical,” a union spokesman said.
Wall Street doesn’t take the Towers plan seriously, analysts said.
“This offer is absolutely meaningless. They have not really made a bona fide offer,” said Louis Marckesano, airline analyst with the Philadelphia brokerage of Janney Montgomery Scott. “They keep throwing around names of people and that may not have any influence on anybody. In order to make a reasonable decision, you’d need to know what kind of a track record they have.”
Hoffenberg said that Mitchell--sent to federal prison for his role in the Watergate scandal--had been retained as a consultant to influence some of the members of the Pan Am executive committee to accept the deal. The key member of this three-man group is Donald M. Kendall, chairman of Pepsico and a close friend of both Mitchell and Nixon, he said.
The 13-D also said that efforts were being made to retain Volcker. The papers said Volcker had met with Hoffenberg and with former Navy Secretary John F. Lehman, who is supposed to head Pan Am if the Towers efforts are successful. Towers also said that Edward Nixon had been retained to study “ways in which the international business of (Pan Am) can be increased.”
In recent weeks, Beverly Hills financier Kirk Kerkorian and the Pritzkers, the hotel owners who also control Braniff Inc., have sought to win union concessions and take over the New York-based airline. Kerkorian’s offer was rejected Nov. 12 by Pan Am management. The Pritzkers are still a possibility.
