Acquisition Group to Pump $15.4 Million Into Hawaiian Airlines

The investment group seeking to acquire Hawaiian Airlines has altered its purchase agreement in order to pump an additional $15.4 million of working capital into the financially ailing carrier.

J. Thomas Talbot, the Newport Beach attorney heading the investment group, also said Monday that the acquisition of the airline holding company, HAL Inc. of Honolulu, is expected to be completed Dec. 29.

The $22-per-share acquisition price has not been changed. The Talbot group will pay $27.4 million if the minimum number of shares are tendered, or $41.8 million if all 1.9 million shares outstanding are offered.

The amended deal, disclosed Monday in a filing with the Securities and Exchange Commission, calls for the investment group--which includes former baseball commissioner Peter V. Ueberroth--to swap a new class of preferred stock for 700,000 shares of HAL common stock held by the company’s current chairman, 73-year-old John H. Magoon Jr.

The new terms, agreed upon by both sides, would make the $15.4 million previously earmarked for the purchase of Magoon’s stock available for working capital.

Magoon would still receive nearly $9 million for 400,000 additional shares.

Talbot said Monday that terms were changed because of the “deteriorating financial condition” of the airline in recent months. For the third quarter, the airline showed net earnings of $324,000, down 31% from the previous year.

In the 2 1/2 years before the Talbot group launched its acquisition bid on Aug. 21, HAL lost more than $30 million. And while it reported a profit in the third quarter this year, it was lower than usual in what traditionally is the industry’s best period.

Upon completion of the purchase and the group’s merger into HAL, the merged company would swap 154,000 shares of newly authorized series B preferred stock to Magoon for the 700,000 shares of the common stock. The Talbot group would then purchase the $15.4 million worth of common stock from the company.

While the non-voting preferred shares would be redeemable at $100 per share, Magoon would not be able to cash them in for at least 10 years, although they could be called in by the company at any time.

The Talbot group, in its SEC filing, said that 695,000 shares--more than enough to satisfy its minimum demand--had been tendered Friday.

Security Pacific Bank has agreed to provide loans totaling $101 million to finance the acquisition and provide post-acquisition working capital for the carrier.