AIRLINES : NWA Board Rejects All Buyout Offers, Ups the Ante

NWA Inc.’s board of directors rejected a set of buyout offers Monday and invited suitors to revise their bids, but the parent of Northwest Airlines said it might not find any revision acceptable.

“NWA Inc. has received a number of acquisition proposals in response to its request for offers,” the board’s five-member review committee said in a letter to bidders.

“None of the proposals is acceptable in its present form,” it said. “Further, none of the proposals is sufficiently more attractive than the others.”

Stock Falls

The committee said suitors have until June 16 to submit revisions “so as to enhance the attractiveness of their proposals.”

NWA stock tumbled $1.875 to close at $106.875 a share in New York Stock Exchange trading Monday.

Pan Am Corp., which earlier made a proposal valued at $3.3 billion, was the only announced bidder to say immediately that it would submit a revised bid, but the company did not reveal details.

Analysts said NWA’s move could anger other suitors, who expected the bidding to be done in a single round.

“We are studying the special committee’s letter and, for now, will withhold any reaction to it,” said a spokesman for oil billionaire Marvin Davis, who made a $2.7-billion offer earlier this year and is one of four known bidders.

Alfred Checchi, a Los Angeles investor who heads another group bidding for the airline that includes KLM Royal Dutch Airlines and the Australian holding company Elders IXL Ltd., would not comment.

The only other known suitor is the airline’s 20,000-member machinists’ union. Guy Cook, the union’s president, did not return telephone calls.

KKR Possible Suitor

Barbara Beyer, president of Avmark Inc., an aviation consulting firm in Arlington, Va., said NWA’s move could be designed to broaden the scope of bidders.

Among those rumored as a possible suitor is the takeover firm Kohlberg Kravis Roberts & Co., which could now step in and make a bid if it missed the initial deadline, Beyer said.

A KKR spokesman in New York has declined to say whether the company is a bidder for Northwest. The company continued its silence Monday.

Michigan State Treasurer Robert Bowman, who invests state employee’s money in KKR’s buyout funds, said Monday’s move by NWA could be designed to open the door to KKR, which he said missed last Thursday’s bidding deadline.

Bowman said he expected the committee to reject the first bids as a matter of routine to pressure suitors to increase their offers.

The committee’s letter repeated a statement that “there can be no assurance that a sale of NWA or any other transaction will result from NWA’s review of alternatives.”

Will Review Concerns

It said each of the bids is “subject to unacceptable material conditions.” The letter also directed interested buyers to address takeover concerns raised by federal regulators and asked them to propose compensation for NWA in the event it accepted an offer that later collapsed.

“Bidders should specifically address their ability to consummate a transaction in light of financing and other conditions,” the letter said.

U.S. Transportation Secretary Samuel K. Skinner has informed NWA his department would review any proposed leveraged buyout of the airline to judge the financial fitness of the proposed new owner.

NWA’s review committee will meet with department officials to discuss Skinner’s concerns, the company said Monday.

The committee said in its letter that suitors are welcome to meet with NWA management to seek more information about the airline, but the letter stressed that the meetings would not include negotiations.

“You should be aware that no aspect of any of the proposals has been disclosed to members of NWA management,” the letter said.

The quote prompted rumors that NWA management, led by Chairman Steven Rothmeier, was assembling its own buyout proposal, said Kurt Rivard, an analyst for Dain Bosworth Inc., Minneapolis. But Rivard said he doubts such a move is in the works.

Rothmeier told reporters in April that no management-led buyout offers were planned.