Icahn TWA bid nixed
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March 9, 2001: 7:32 p.m. ET
Judge calls bid 'almost a joke,' rules only AMR bid met auction guidelines
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NEW YORK (CNNfn) - A federal bankruptcy court judge in Wilmington, Del., ruled Friday only AMR Corp.'s bid for Trans World Airlines met guidelines set for the auction of TWA's assets, scuttling financier Carl Icahn's late bid for the company.
The decision effectively ends any consideration of bids for TWA except the $742 million bid from American Airlines parent AMR Corp., which is endorsed by TWA's board.
The court will reconvene Saturday morning to consider whether to approve American's bid, and will consider TWA's motion to reject a deal under which the ailing airline sells discounted tickets to Icahn, a former TWA chairman.
"Quite frankly, it's almost a joke," Judge Peter Walsh said of a two-page document outlining the Icahn group's proposal. "It's an opener for discussion, and you're not going to have that discussion before this judge."
"The only proposal on the table according to the procedure is American's, and I'm not going to substitute my judgment for that of the (TWA) board of directors," Walsh said.
Raised bid rejected
The Icahn-financed group announced it was raising its bid for TWA Thursday evening, on the eve of the bankruptcy court hearing.
The bid was looking for $100 million in labor cost savings, including layoffs, in order to take off, according to Reuters news service.
In a legal deposition taken by American Airlines on Thursday, investment banker Brian Freeman, head of the Icahn-financed group, said the group's offer depends upon achieving $100 million in cost savings from TWA's unions, or, alternatively, using the bankruptcy court's powers to reject the unions' labor agreements if they do not agree to the $100 million cost savings.
The cost savings include a presumed 5,000-person reduction in TWA's work force, Freeman said.
Icahn was a previous owner of the airline who filed for bankruptcy protection for TWA in 1992. It was the first of three bankruptcy filings for the airline in the last decade, the most recent coming at the same time that TWA accepted a bid from American parent AMR Corp. (AMR: Research, Estimates).
Freeman's increased bid came the day after the company rejected the bid and gave final approval to an enhanced AMR offer.
American touted its buyout offer as the best for all parties involved. American has committed to providing employment to all of TWA's unionized workers.
TWA's stock is no longer traded since the bankruptcy filing. Shares of AMR lost 25 cents Friday to close at $36.45.
-- from staff and wire reports
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