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Investors Sought For Hawaiian Airlines

Fri Mar 05, 2004 10:10 am

Investors Sought for Hawaiian Airlines

Trustee, Creditors Committee Propose New Process for Best Value

HONOLULU, March 4, 2004 -- Hawaiian Airlines Trustee Joshua Gotbaum and its Official Committee of Unsecured Creditors today asked the bankruptcy court to approve a new, competitive process to solicit potential investors in the airline.

Gotbaum and the Committee believe that, to get top dollar for Hawaiian, there needs to be open competition, and the process they are proposing would provide it.

"Hawaiian Airlines is not only one of the nation's best airlines, it’s also one of the most profitable," said Gotbaum. "We've received plenty of calls from interested investors, and the way to get the best deal for Hawaiian is to let them compete for it."

Gotbaum noted that three proposals had already been filed, and that the new joint process would make it easier for others to come forward. Under the process, qualified investors would be required to make formal proposals in May. The Trustee and Committee would then evaluate them and propose the best one to the bankruptcy court.

Hawaiian's Official Committee of Unsecured Creditors decided the joint proposal was in the best interest of unsecured creditors and the estate.

A Committee spokesperson said, "In order to ensure the continued viability of Hawaiian and maximize the recovery to unsecured creditors, there needs to be a level playing field for all potential investors. The procedures presented in the joint proposal will provide the stepping stone for the exit from bankruptcy and the future success of Hawaiian."

The joint Trustee/Committee proposal will be heard in bankruptcy court on April 1. Under the proposed schedule, Hawaiian Airlines could exit from Chapter 11 by end of summer.

Based on its as-yet unaudited financial results, Hawaiian finished 2003 with nine straight months of operating profits, generating $78 million in operating profits on $705 million of revenues. Hawaiian’s audit may result in adjustments to its accounts, so Hawaiian’s final financial results for 2003, expected by mid-March, may vary.

In addition, Hawaiian has achieved the nation's best on-time performance for the past three months since it began reporting its results to the U.S. Department of Transportation.

The process schedule proposed by the Trustee and Committee is as follows (subject to change depending on the bankruptcy court’s availability):

March/April Potential investors sign confidentiality agreements and are given information about Hawaiian's operations and finances.

April 21, 2004 Potential investors submit written "expressions of interest," non-binding proposals concerning how they value the company and what investment they might make in exchange for a particular percentage of the company's stock. The Trustee and Committee focus on the best proposals and continue to provide information to improve them.

May 12, 2004 Deadline to submit binding written proposals to the Trustee and Committee. The Trustee and Committee will then meet with potential investors to determine the best proposal. They may decide to permit a final round of bids.

May 20, 2004 By this date, the Trustee and Committee will select the proposal they jointly determine to be in the best interests of Hawaiian and creditors and propose it to the bankruptcy court.

May 25, 2004 Bankruptcy court hearing to confirm selection of the winning bidder.

May 31, 2004 After court approval of the winning proposal, the Trustee, Committee, and winning investor will file an amended plan of reorganization and amended disclosure statement incorporating that proposal.

June 25, 2004 Bankruptcy court hearing on disclosure statement.

August 10, 2004 Bankruptcy court hearing on confirmation of plan of reorganization.

End of summer Hawaiian Airlines exits Chapter 11.

The Committee is comprised of representatives from Air Line Pilots Association, International; Association of Flight Attendants; Aviation Insurance Services of Nevada; International Association of Machinists and Aerospace Workers, AFL-CIO; Panda Travel; Pratt & Whitney; and Starr Seigle Communications, Inc.

Brett H. Miller of Otterbourg, Steindler, Houston & Rosen, P.C., in New York is lead counsel to the Committee.

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