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Icahn raises TWA bid
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March 8, 2001: 5:37 p.m. ET
Increased bid comes day after TWA selected bid from American for assets
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NEW YORK (CNNfn) - Financier Carl Icahn and his financial partners, who saw their 11th-hour bid for troubled Trans World Airline rejected late Wednesday, announced Thursday they would raise their bid and take the offer directly to the bankruptcy court judge deciding the case.
Officials at American Airlines, which won the bid for TWA Wednesday evening with an increased offer for the troubled carrier's assets, did not have an immediate comment on the new effort, but a TWA spokeswoman said the new bid does not change the company's support of American' offer.
 "Mr. Icahn's group received due consideration for their proposal, which was tardy and proved to be inadequate," said Julia Bishop, spokeswoman for TWA, the nation's No. 8 airline. "TWA is moving forward with the highest and best offer, which is from American Airlines."
TWA accepted American's offer in January at the same time it filed for bankruptcy court protection for the third time in a decade. The first time it filed for bankruptcy protection was in 1992, when Icahn owned the airline.
A statement from Icahn's office said a group he was backing, the TWA Acquisition Group, would raise its bid by $480 million to more than $1.1 billion.
The group has received support this past week from a committee of unsecured creditors, who stand to have their debts wiped out by the bankruptcy court. Icahn himself is a major creditor under terms of a contract he received upon his departure for the right to sell discounted tickets on TWA. American has indicated it will seek to void that contract.
The group's statement quoted Brian Freeman, who it identified as the chairman of the Icahn-backed group, attacking the decision of TWA's board to accept the lower bid from American's corporate parent, AMR Corp.
 "This represents a feasible plan for a viable stand-alone, competitive airline which will exit Chapter 11 (bankruptcy court protections) with cash in excess of $350 million," said Freeman's statement. "The process which occurred yesterday which was disguised as a court sanctioned auction was a sham since the result had been predetermined in an unfair and biased measure."
The TWA board started an auction of the bankrupt airline's assets Monday but halted it for two days it said to meet with Freeman. But late Wednesday the airline announced it had accepted an increased offer of $625 million in cash from AMR for TWA's assets.
American had initially offered $500 million in cash in addition to assuming about $3 billion in debts and offering credit to keep the airline operating during bankruptcy. It raised that bid by $125 million in cash, and also agreed to leave $117 million in assets with TWA to distribute to creditors.
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Freeman had earlier promised to distribute equity in the stand-alone TWA to its unionized employees in return for labor contract concessions but both the Air Line Pilots Association and the International Association of Machinists have made statements they want nothing to do with any bid that included Icahn.
Federal Bankruptcy Judge Peter Walsh is hear arguments about the bids Friday morning in Delaware. TWA has asked for a decision at the conclusion of the hearing and a decision is expected either at the hearing or soon thereafter.
Freeman's statement said he's confident the bankruptcy court will choose his group, but an American spokesman said earlier in the day Thursday that it is also confident of winning approval from both the bankruptcy board and the Justice Department regulators, who are considering the case due to antitrust concerns.
"There is a 10-day appeals period after the decision," said Al Becker, an American spokesman. "We believe we will be winning bidder, the clear undisputed bidder at that point."
Shares of TWA have not traded since it filed for bankruptcy court protections. Shares of AMR (AMR: Research, Estimates) gained $1.70 to close Thursday trading at $36.70. 
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