Coniston Partners to Seek Control of UAL Corp.’s Board
The New York buyout firm Coniston Partners, which two years ago forced a restructuring of the parent of United Airlines, said today it plans to seek control of UAL Corp.’s board.
Coniston partner Paul Tierney said the group, through a vehicle called Condor Partners LP, has made a filing with the Securities and Exchange Commission stating that it has spent roughly $333 million in recent months amassing 2.1 million UAL common shares, representing 9.7% of the total outstanding.
“We intend to seek control of the board,” Tierney told a reporter.
With control of the board, Coniston would be able to steer the company toward a sale, restructuring or recapitalization.
The statement followed rumors on Wall Street this week that an investor might try to force the company’s board to boost the price of UAL shares. The stock has dropped sharply since the pilots and management failed last month in a $6.75-billion takeover bid for the parent of the nation’s second-largest airline.
UAL declined to comment on the Coniston statement.
UAL stock rose sharply on the news and traded at $183.50 at midday, up $10.50 a share on the New York Stock Exchange.
The stock had traded as high as $294 in September after the company’s board agreed to the employee-management group’s $300-a-share bid, but skidded to around $145 after the effort fell apart last month.
Coniston said it would seek to remove all current UAL directors except Frank Olson, chairman of Hertz, and UAL Chairman Stephen Wolf. It said its nominees to the board are Keith Gollust, Augustus Oliver and Tierney, the principal partners of the New York investment firm.
It said that if elected, its board members would seek to push up the value of UAL stock. This is normally done through a sale of all or part of a company or a restructuring.
“If elected, Condor’s nominees will seek to execute a transaction that maximizes value for stockholders, provides job security and, if desired, an opportunity for equity ownership for unionized and non-unionized employees, and provides the company with a stable base for long-term growth,” the group said in a statement.
Wall Street traders said the disclosure puts tremendous pressure on the UAL board. “If the vote were held today, Coniston would be a landslide winner,” one trader said. He added, “there is no chance of the board’s beating Coniston without some alternative.”
“The board has to respond fast. All Coniston needs is signatures for 51% of the shareholders and it’s over,” said another trader.
Coniston is believed to have held a stake in the company since 1987, when the partnership was instrumental in forcing a restructuring of Allegis Corp., the former parent of United that also owned hotels and Hertz, the rental car company.
