US Air Withdraws Offer For Delta After Creditors Reject Bid
US Airways Group dropped its hostile $9.8 billion offer to buy Delta Air Lines after Delta creditors threw their support behind the bankrupt airline's standalone reorganization plan.
Delta's creditors said in a statement they reached their decision after a lengthy review of both Delta's proposal and US Airways' proposal.
The creditors committee is a key player in Delta's Chapter 11 case. US Airways had asked for support from the committee, and set a deadline of Thursday.
Delta has said it projects it will be worth $9.4 billion to $12 billion when it emerges from bankruptcy by the middle of this year. Its management had said repeatedly it wanted to remain on its own and not combine with US Airways.
The official creditors committee said in its statement that it "has determined that it will support the standalone plan of reorganization as finally agreed upon between Delta and the creditors committee that will be filed later this week."
"The creditors committee reached this determination after engaging in extensive discussions with representatives of Delta and US Airways over the last two months and upon consideration of the advice of the creditors committees legal, financial and industry advisors," the statement said.
The statement added, "In reaching this decision, the creditors committee considered a variety of factors, including, but not limited to, valuation of, the timing and the risks associated with, and the likelihood of a successful consummation of the US Airways proposal and the plan."
"We are disappointed that the Committee, which has been chosen to act on behalf of
all Delta creditors, is ignoring its fiduciary obligation to those creditors," US Airways Chairman and Chief Executive Officer Doug Parker said in a statement. "Our proposal would have provided substantially more value to Delta's unsecured creditors than the Delta stand-alone plan."
Atlanta-based Delta, which has been operating under bankruptcy protection since September 2005, has said it wants to emerge from bankruptcy this spring.