AIRLINES : $350 Million Offered for 72% Share of Continental Airlines

Continental Airlines and Maxxam Inc. on Thursday announced a preliminary agreement calling for the Houston-based conglomerate to invest $350 million in the troubled airline in exchange for a controlling interest.

Maxxam Inc.’s investment will enable Continental to emerge from bankruptcy protection as an independent carrier, the two Houston companies said in the joint announcement.

The deal would give Maxxam about 72% of Continental’s stock after reorganization.

Any deal will have to be approved by the Delaware bankruptcy court handling the case. Continental filed for Chapter 11 bankruptcy protection from its creditors in December, 1990.

“The proposed transaction will close concurrent with Continental’s emergence from bankruptcy,” the statement said.

In announcing the preliminary agreement, Maxxam Chairman Charles Hurwitz said it is vitally important to keep Continental operating independently.

“As an investment, we believe Continental has a number of fundamental strengths: good routes, competitive costs, strong management and a dedicated team of employees. And a key for us is the fact that Continental is Houston-based.”

Hurwitz reportedly met Wednesday with Continental’s board of directors in New York to discuss terms of the deal.

Last February, the carrier filed a plan of reorganization that called for turning over ownership of the company to the airline’s numerous creditors in exchange for forgiving more than $4 billion in debt. That plan did not require an outside investor.

The Houston Chronicle reported that Hurwitz and Continental officials have been discussing a possible deal for several months. But progress slowed in recent months when fare wars ravaged the industry.