UAL Corp.`s unions will take their patched-up takeover proposal to the company`s board Tuesday, but the advance betting was that the deal won`t fly. That pessimism was reflected in the price of UAL`s shares, which closed Monday at $91.25 a share, off $11.50, on the New York Stock Exchange.
It is believed the board of UAL, parent of United Airlines, convened Monday afternoon for a session that was to last through Tuesday. Gerald Greenwald, the former Chrysler Corp. vice chairman who heads the unions`
buyout effort, is to present the unions` revised proposal to the board Tuesday.
In a telephone interview Sunday from New York, Greenwald disclosed that the unions failed to get bank financing for their takeover proposal. Greenwald declined to confirm reports that the unions were talking to the banks about an offer of $165 to $170 a share, with about $150 of that in cash and the remainder in securities.
Greenwald said the unions have a backup proposal that can provide about the same value as the deal discussed with the banks, but with a cash component of only between $60 and $80 a share.
He said the deal could be financed partly by airline industry suppliers and sales-and-leasebacks of aircraft and other equipment. However, he said no supplier has committed to providing financing.
There was speculation the remainder of the offer will consist of preferred stock, notes and ”contingent rights” units. The latter would allow current shareholders to participate in UAL`s future profits if the company meets certain operating goals.
Sources doubted the UAL board would embrace a proposal that is below the $201-a-share, or $4.54 billion, bid it accepted from the unions last April and for which the unions were given until Tuesday to secure financing. The board also may spurn a bid whose financing is uncertain and is so light on cash and so heavy on securities of uncertain value.
If the board rejects the takeover proposal, it will have to deal with three hostile unions, each with open contracts and threatening to strike to press their demands. The directors also could face a movement to oust them by angry shareholders, possibly led by the New York investment firm of Coniston Partners.
According to one published report, UAL management may be working on a plan to mollify shareholders by distributing to them proceeds from the sale and leaseback of aircraft. Efforts to reach UAL officials for comment were unsuccessful.
The board may have other matters to consider. It may want to resume negotiations on a huge order of widebody jets. Talks on the order have been on hold since the summer, at the unions` request. It also is possible the board might want to consider acquisitions of rival carriers or their routes.
