Mexican Investor Triggers Continental Bidding War
A bidding war erupted Friday for Continental Airlines as a group led by Mexican investor Alfredo Brener offered $385 million for the carrier, which is reorganizing under bankruptcy laws.
The offer is the first since Maxair Holdings, led by takeover strategist Charles Hurwitz, proposed a $350-million purchase of the Houston-based carrier last month.
U.S. Bankruptcy Judge Helen Balick in Delaware approved the Maxair bid, but left the door open to other investors, saying those offers would have to be at least $385 million. Continental is incorporated in Delaware.
Brener’s group, Houston Air, said Friday that $60 million of its offer would be new stock, while the remaining $325 million would be borrowed.
“I don’t feel like a white knight,” Brener told reporters. “I feel it is a good company and we are very interested in it.”
He said the airline’s route structure, with hubs in Houston, Denver and Cleveland, is strong.
“The South American markets are growing very rapidly,” Brener said. “Europe is growing very rapidly. Continental has the advantage geographically being where it is. There is no reason why Continental can’t be the No. 1 airline.”
Continental, the nation’s fifth-largest carrier, has been struggling to emerge from bankruptcy protection since Dec. 3, 1990. The airline needs an outside investor in order to raise the cash needed to put together a financial reorganization plan.
Brener is a member of the wealthy Mexican Brener family, the largest independent shareholders of Mexico City-based Mexicana Airlines.
Mexicana Airlines would not have any involvement with the proposal, Brener said.
He said he learned about the airline industry from his family’s association with Mexicana but added he would not be a hands-on manager if he acquires Continental.
“From what I’ve seen of the current management, I’ve been very impressed,” Brener said. “The problems are the problems of the industry. They’re good, hard-working people.”
Continental officials confirmed Friday they had received Houston Air’s proposal and established that the offer met guidelines set out by the bankruptcy court.
“As a result, Houston Air Inc. is qualified to receive additional information from Continental and to commence negotiations with Continental working toward a possible investment agreement that would overbid and supersede the Maxair agreement,” Continental said.
Maxair, a group led by Hurwitz’s Houston-based conglomerate Maxxam Inc., signed a preliminary agreement last month with Continental to purchase 72% of the company for $350 million.
Continental officials said in their statement Friday that the carrier “remains committed under its agreement with Maxair and that it is proceeding diligently with the Maxair investment group to reorganize successfully.”
The Hurwitz group’s offer would provide $350 million in cash, $325 million of which would be borrowed, with loans backed by Continental assets.
“Continental will continue to work to that end unless it receives a firm commitment that it is assured will close promptly and that is determined by its board of directors to be a higher and better offer,” the company said in the statement.
Maxxam spokesman Scott Lamb said it would proceed with its offer.
Brener also controls American Breco, a 6-year-old company with interests in real estate, investments, management services, cattle ranching and supermarket investments. He controls the franchise rights for Blockbuster video stores in Mexico and serves on the board of directors of Fiesta Mart Inc., a grocery chain.
“He’s an outstanding person, a very efficient director,” said Donald Bonham, Fiesta chairman.
The Mexican native moved to Houston in 1989 from Los Angeles, where he was chairman of Boys Market Inc., a Los Angeles-based supermarket chain.
The Brener family, headed by Alfredo’s father, Pablo, owns the luxurious Camino Real hotel in Mexico City, as well as the Las Hadas resort in Manzanillo.
