Checchi Group Takes Control of Northwest Airlines
An investment group led by Los Angeles financier Alfred A. Checchi took control of Northwest Airlines on Thursday but not without a minor spat with the airline’s managers.
Northwest management refused to disclose the names of its representatives on the airline’s new board of directors Thursday, despite the urging of Checchi’s lawyers. “Our feeling is that it is now a private company, and we don’t have to disclose the names,” said Alan Muncaster, a Northwest vice president.
But a new seven-member board took charge of the Eagan, Minn.-based airline Thursday after Checchi completed his $121-a-share tender offer for NWA Inc., the airline’s parent company. Checchi, a former Marriott Corp. treasurer, won a three-month auction for the airline in June with a $4 billion bid.
Robert L. Friedman, a lawyer for Checchi with the New York firm of Simpson Thacher & Bartlett, said the merger of NWA with Wings Holdings Inc.--Checchi’s group--will be completed sometime next week after permanent financing is arranged. The permanent loan will replace a temporary $3.1-billion loan used to buy NWA stock. Friedman said the new loan will be secured by Northwest’s aircraft and various other assets.
The transaction is still under review by the U.S. Department of Transportation. Although the department cannot block the takeover outright, it could refuse to transfer Northwest’s certificate of operation to Checchi’s group. That is considered to be unlikely, but such an action could ground Northwest.
Transportation Secretary Samuel K. Skinner has said he is concerned with leveraged buyouts that burden airlines with large amounts of debt. Several knowledgeable observers said Thursday that they doubt that the department will object to the takeover, although they said it might require minor changes in Checchi’s operating plan for the airline.
On Thursday, Checchi’s group disclosed the names of its four representatives on Northwest’s new board. They are Checchi; Frederic V. Malek, a former president of Marriott Corp.; Alexandre C. Goodwin, a partner in Checchi’s Los Angeles investment firm, and V. A. Ravindran, managing director of Elders Finance Group, a unit of the Australian conglomerate Elders IXL that is a partner in the transaction.
A source close to the deal said Northwest management’s members of the new board are probably Chief Executive Steven G. Rothmeier, President John F. Horn and Melvin R. Laird, a former secretary of defense and a holdover from the old board.
Muncaster, the Northwest vice president, said he could not confirm the appointments. However, he said the dispute over disclosure of board members does not indicate friction between Checchi and Rothmeier. “I don’t think they ever discussed it,” Muncaster said. “This never got beyond the lawyer level.”
After the merger is completed, five members will be added to the board, including a representative of KLM Royal Dutch Airlines, one of Checchi’s partners in the deal.
