Coniston and United’s Biggest Unions Agree on a Buyout Package : Airlines: The New York investment firm will wage a proxy fight to replace the carrier’s board. The workers promise not to strike and agree to wage and benefit concessions in the deal.

United Airlines’ three major unions said Monday that they and a New York investment firm have agreed on a new strategy to acquire UAL Corp., the airline’s parent company.

The unions joined forces with Coniston Partners in the effort, which will begin with a proxy fight for control of UAL’s board, and promised major concessions on wages and benefits if it succeeds.

The takeover proposal was valued at $4 billion to $5.2 billion.

A previous attempt at a buyout of UAL collapsed last Oct. 13, when banks declined to come up with the financing for a deal proposed by a group including the pilots union, UAL management and British Airways. The failure touched off a major stock market tumble that day.

The airline’s pilots, machinists and flight attendants unions have jointly formed an entity called United Employee Acquisition Corp. specifically for the takeover attempt. It then entered into an agreement with Condor Partners, an affiliate of Coniston.

Coniston, which owns 11.8% of UAL and is the company’s largest shareholder, said that the proxy fight would be the first step in the takeover effort and that it hopes to throw out the current UAL board and install its own at the corporation’s annual meeting, which is scheduled for April 26.

Paul E. Tierney Jr., a partner in Coniston, said in a telephone interview that financing for the proposed acquisition would not be sought until it is determined whether the proxy fight is successful. “We don’t control the property yet,” he said. “It is difficult to get a commitment (for financing) until we prove we are in a position to pay for it.”

He said the 15-member board that Coniston will try to install consists of the three Coniston Partners, four union representatives and eight other people, whose names he would not release.

Stephen M. Wolf, UAL’s chairman and president, said the current UAL board “is prepared to give careful consideration to any offer by Condor Partners and the three unions of UAL to attempt to effect the acquisition of the company.” He said the board would meet “shortly to discuss this matter, as well as alternatives for realizing shareholder value.”

Airline analysts said the announcement was significant for, among other reasons, the fact that the airline’s three major unions agreed on a buyout for the first time. The machinists and flight attendants did not participate in the effort that fell apart in October.

Jerry Rollings, a spokesman for the International Assn. of Machinists and Aerospace Workers, said his union had favored a buyout previously but was “against the terms” of the last attempt. “We were not against a buyout per se,” he said, adding that the machinists opposed the deal because “it was loaded heavily with debt. It put all of the funding on the backs of the workers.”

The other two unions involved are the Assn. of Flight Attendants and the Air Line Pilots Assn.

They said in a joint statement issued by their new company that at the time of an acquisition of United, the three unions would enter into collective bargaining agreements with the new management that would result in substantial savings on labor costs. The unions also said a new contract would include no-strike commitments.

The buyout proposal would give shareholders $150 per share in cash, $25 per share in 10-year senior subordinated notes bearing 15% interest, and non-voting common stock constituting 25% of the new company’s total common equity. The remaining 75% would be held by an employee stock ownership program.

The transaction would be subject to approval by shareholders and the unions’ members and to obtaining financing.

Robert Decker, airline analyst with Duff & Phelps, Chicago investment research firm, estimated that the deal would be worth about $230 per share to the common stockholders. UAL stock closed Monday at $154.50 on the New York Stock Exchange, up $12.

The proposal “is clearly significant,” Decker said. “It indicates that the unions and Condor have gotten together and come up with a clear proposal.”

Timothy Pettee, airline analyst in New York with the Merrill Lynch investment firm, placed a somewhat lower value on the offer, $190 to $200 a share.

The valuations are considerably lower than the $300-a-share offer last fall, which would have valued the company at about $6.5 billion.

“Basically, there is a bit of a fight developing, and the stock market is betting on a positive outcome. But it is difficult to call a winner yet,” Pettee said.

Some analysts pointed out that the buyout proposal has many hurdles to overcome.

“It is far from a done deal,” said Kevin Murphy, airline analyst with Morgan Stanley & Co., another brokerage. “There are still too many variables. It is a proxy fight with no financing, and we don’t know what the leadership of the airline will be if it succeeds.”