Banks Pull Out, but Unions Vow a New UAL Bid : Airlines: The offer is likely to be much lower than the $201 a share that the company’s board approved in April. It may set up a union-board showdown.

United Airlines’ unions said Sunday that they will make a new offer for parent UAL Corp. on Tuesday that does not involve bank loans, following the withdrawal from the buyout of four major banks, including Los Angeles-based Security Pacific Corp.

The new offer would be financed without bank loans because it would use less cash. Gerald Greenwald, chairman of the United Employee Acquisition Corp., said shareholders would receive cash and a package of three securities worth in excess of $150 a share.

Greenwald said the new offer had the support of UAL’s largest shareholder, the Coniston Partners investment firm. It wasn’t clear, however, that UAL’s board would approve it.

The unions--including pilots, mechanics and flight attendants--expect to finance the new offer with money contributed by aircraft manufacturers, the pilots’ retirement account and UAL’s own treasury. They would also get money from the sale-leaseback of aircraft--under which a company sells airplanes and leases them back. Greenwald declined to say how much money was involved.

The new offer sets the stage for a showdown at UAL’s board meeting Tuesday. The proposed offer will almost certainly be worth less than the $201-a-share union offer that was accepted by the UAL board in April. At the time, the board indicated that it would not accept a lower bid.

The board does not face an easy decision. The unions have already said they would strike, if necessary, to obtain wage increases if their buyout fails. The pilot union further signaled its dissatisfaction Sunday when it rejected a company proposal regarding payment for special military flights to the Middle East.

On the other hand, the board could open itself up to shareholder attack if it accepts a bid that is much lower than the $201-a-share offer.

Besides the union offer, the board is expected to receive a counterproposal from UAL Chairman Stephen M. Wolf that calls for distributing cash to shareholders from funds raised through the sale-leaseback of aircraft. Such a move could satisfy UAL shareholders, many of whom have lost millions on the stock since the first $300-a-share offer collapsed last October.

A recapitalization wouldn’t do much for labor relations at United, and might actually hurt, because the unions could argue that shareholders were getting money that belongs in their paychecks.

Greenwald would not speculate on how UAL directors would view the union offer. “I am just going to concentrate on making a strong offer,” he said.

Greenwald said the unions decided not to team up with Los Angeles billionaire Marvin Davis on the new bid because they wanted majority ownership. Davis last week proposed to buy the company with the unions under a plan that would give the unions a 20% stake and the option to buy the rest in two years.

The unions said any hope of financing the $201-a-share offer was dashed after fuel prices soared in the wake of Iraq’s Aug. 2 invasion of Kuwait.

“The doubling of oil prices since Iraq’s invasion of Kuwait and the extraordinarily tight credit market conditions which have existed since then have made it impossible to syndicate the proposed bank loan,” the employee group said in a statement released Sunday.

Greenwald said on Sunday that continued economic uncertainty caused the banks to turn their backs on an even lower offer of $175 to $180 a share.

“It’s not that it wasn’t a good transaction,” he said. “They (the banks) were just scared.”

Five banks were prepared to lend $1.75 billion but couldn’t come up with the remaining $250 million that was required and could not find other banks to participate in the financing.

Besides Security Pacific, the other banks that withdrew include Manufacturers Hanover, Bankers Trust and First Chicago. A Dutch bank, NMB Postbank Groep N.V., had also agreed to join the lead-bank group.

Greenwald said the new offer would include notes, preferred stock and a certificate that appreciates in value as UAL’s earnings rise.

Greenwald said participation from aircraft manufacturers would come when UAL placed an order for widebody aircraft. He said no decision has been made on whether to buy aircraft from Boeing, McDonnell Douglas or Airbus Industrie.