Analysts Doubt Iowans’ Plan for $1.5-Billion Pan Am Bid

Airline analysts were skeptical Wednesday about plans by an Iowa group to raise $1.5 billion to buy Pan American World Airways and move its headquarters to northeast Iowa.

“I’d give this a long shot at occurring,” said Robert Decker, an analyst for Duff & Phelps Inc. in Chicago. He said it would be nearly impossible to raise the money needed for the buyout, especially in light of Pan Am’s tottering finances.

A Waterloo, Iowa-based investment group proposes to sell at least 300,000 bonds in $5,000 denominations to buy Pan Am, according to Pan Am airline Capt. Neil Sapp, 51, of Miami. That would be equivalent to borrowing half the annual state budget for Iowa.

Speaking Tuesday in Waterloo at a luncheon attended by 175 northeast Iowa business and government officials, Sapp said the effort should not be taken lightly.

“We would like to make a solid offer in January,” he said. “We’re not crazy; we’re just innovative.”

Sapp and Samual Nodarse of Cedar Falls, Iowa, a retired University of Northern Iowa professor, formed the Iowa Acquisition Group and said they would buy the company on condition that its headquarters move from New York to Waterloo.

He said money raised through the sale of bonds would be invested with Iowa banks, primarily in certificates of deposit, with the interest used to pay off loans from investment bankers. Investors would get interest when bonds mature in nine years.

Officials at Pan Am’s headquarters in New York did not immediately return phone calls for comment. But industry analysts disagreed with Sapp’s prediction.

“In today’s market, it would be difficult to raise that kind of money for an airline like Pan Am,” Decker. “We’re in a period where debt markets are cautious and conservative.