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February 1, 2008 |
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DELTA AIR: Merger Talks with Northwest Hit Snag, Source Says The ongoing merger talks between Delta Air Lines Inc. and Northwest Airlines Corp. have stalled over a disagreement with respect the roles of Northwest CEO Doug Steenland and Delta CEO Richard Anderson, an unnamed source familiar with the negotiations disclosed, the Atlanta Journal-Constitution reports. In a merged company, as is practiced in many deals, the CEO of one company keeps his role as CEO while the other CEO is named non-executive chairman. Industry analysts and insiders have presumed that Mr. Anderson wants to be chief executive while Mr. Steenland wants to be chairman. However, the paper says, this power-sharing structure could present problems due to the personal histories of the two executives. Mr. Anderson was Mr. Steenland's boss while Mr. Anderson was serving as Northwest's CEO in the 1990s. Accordingly, Mr. Anderson may not be too eager to have Mr. Steenland step in as chairman of the board, as this would give Mr. Steenland significant power. The source said there has been little evidence of active discussions between Delta and UAL Corp. Commencement of Merger Negotiations As reported in the Troubled Company Reporter on Jan. 22, 2008 Delta Air obtained approval from its board of directors on Jan. 11, 2007, to engage in formal merger talks with both Northwest Airlines and UAL. Delta, which is in the early stages of discussions with both Northwest and UAL, hopes to reach an agreement with one of them over the next two weeks. Delta is anticipating a deal announcement as early as mid- February following Delta's board meeting scheduled early in the month. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/ -- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. As of Sept. 30, 2007, the company's balance sheet showed total assets of US$32.7 billion and total liabilities of US$23 billion, resulting in a US$9.7 billion stockholders' equity. At Dec. 31, 2006, deficit was US$13.5 billion. (Delta Air Lines Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000) * * * As reported in the Troubled Company Reporter-Latin America on Jan. 21, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. |
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