Unions to Seek Banks’ Help in Their New Bid for UAL

The unions at United Airlines plan to hold a meeting with banks, perhaps as early as today, in an effort to interest them in a new, $3.9-billion offer for the airline’s parent, UAL Corp.

The new offer of $175 to $180 a share is said to include around $150 in cash. The rest consists of notes worth around $30 a share.

The unions, whose members include United’s pilots, mechanics and flight attendants, have invited representatives of about 20 banks to the meeting. The unions face an Oct. 9 deadline to have their financing for the deal completed.

The new offer would be financed with $2 billion in bank credit and $2 billion from other sources. Alternatives under discussion include notes from aircraft and engine suppliers, equity from the pilots’ retirement plan and the sale-leaseback of aircraft.

The Wall Street Journal, quoting anonymous sources, reported in its Tuesday editions that an unnamed foreign airline is interested in participating in the deal. UAL’s shares rose $7.625 Tuesday to $105 in response to the report.

One airline that might be interested is British Airways. It has a marketing agreement with United, and it joined in an earlier, failed bid for UAL Corp. The failure of that $300-a-share bid last October touched off one of the biggest stock market plunges in history.

British Airway’s role would be limited by federal rules that restrict foreigners from owning more than 20% of a U.S. airline. A spokesman for British Airways in New York declined to comment on its possible participation in a UAL buyout.

So far, the unions have lined up four banks--including Los Angeles-based Security Pacific Corp.--to help raise $2 billion. But neither Security nor the other banks--Manufacturers Hanover, First Chicago and Bankers Trust--have committed any of their own funds to the proposed deal.