Financier Icahn Offers to Buy Carrier Pan Am
Financier Carl Icahn offered Friday to acquire the recently reconstituted Pan American World Airways, which ceased operations and filed for bankruptcy two weeks ago.
But the U.S. Bankruptcy Court judge overseeing Pan Am’s Chapter 11 bankruptcy, who would have to approve any deal, expressed “grave” doubts about the proposal from Icahn, who once ran Trans World Airlines.
“I don’t see this deal as being what we need here,” Judge A. Jay Cristol said at the end of a court hearing in which lawyers for Pan Am and Icahn described the deal.
Icahn, who won a reputation as a corporate raider in the 1980s, agreed to acquire the assets of Pan American World Airways for $43 million, a lawyer for Pan Am said earlier.
Cristol thanked Icahn for giving the court “an appraisal of Pan Am assets”--about $8 million--but urged Pan Am to continue talks over the weekend with Icahn and other potential investors before another bankruptcy hearing Monday.
Pan Am Chief Executive David Banmiller conceded to the court that he did not know if the proposal was the “best thing for the company.”
“At this point, it was the only deal that was presented that was reasonably satisfactory to the company,” he told reporters after the hearing. “There is an opportunity for others to jump into the bidding process.”
Icahn’s proposal included an $8-million cash payment for the company’s assets, a $25-million cash infusion to restart the airline and a $10-million assumption of liabilities to ticket-holders.
Pan Am Corp.--which has two subsidiaries, Pan American World Airways and Pan American Airways Corp.--filed for Chapter 11 bankruptcy protection Feb. 26.
The airline ended its regularly scheduled flights Feb. 27 and laid off 1,250 workers, although it has had some charter flight business since.
At the time of the filing, Pan Am claimed assets of $50 million and liabilities of $147 million.
The Pan Am now fighting for its life in Bankruptcy Court is an attempt to restart one of aviation’s most venerable names.
The company started operations only 17 months before its bankruptcy, using the name and blue globe logo of the original Pan Am, which was founded in 1927 but failed in 1991 under a mountain of debt.
