Originally Posted by
sllevin
NW's "Golden Share" is no longer valid. One of the conditions of it was that there be no change of control at NW -- and bankruptcy is a change of control.
That may not be the case. I believe a change of control at NW give CO the
option of redeeming their share for $100.
(Section 3.1) The Share shall not be redeemable by the Corporation [CO] except that it
may be redeemed, at the option of the Corporation...upon or following the occurrence [of a redemption event such as] a NW Change of Control, unless the Corporation [CO] shall have previously notified Northwest in writing that a NW Change of Control will not be deemed to occur by virtue of the relevant event.
“NW Change of Control” means:
(i) a merger,
reorganization, share exchange, consolidation, tender or exchange offer, private purchase, business combination,
recapitalization or similar transaction as a result of which...a Major Carrier, any of its Affiliates or any combination thereof acquires, directly or indirectly, Beneficial Ownership of 25% or more of the Capital Stock or Voting Power of a Northwest Affected Company.
Here's the source thread with the entire agreement.
At this stage of the game I do not think Larry want's the Golden Share to go away...I mean after all, why would he.
We know he want's CO to remain independent.
We also know he has an "interest" in LHR and an extent, UA's routes. Should he wish to acquire them the Golden share will not be an issue. Granted some could sight Bermuda II as being a roadblock to the emerging entity of CO/UA retaining the LHR slots in the event of a merger but I suspect this detail will not be major roadblock.
…and while I’m on the subject of Bermuda II the reason CO opposes/opposed the notion of droping ownership restrictions between the US/EU in return for open skies (read: LHR access) is that it would put them at an monumental disadvantage. The reason for this the incumbents of LHR (UA, AA, VS, BA) already have the prime slots for TATL operations. As such, if open skies were to occur tomorrow the existing carriers could easily rearrange their slot holdings to offer virtually immediate service into LHR while others scrambled to find/buy their own ones. (i.e. BA could easily switch their two n/s IAH flights to LHR but CO would have to acquire slots, gates, ground staff, counter space, etc. (assuming they could pay the price of all that.) all while BA makes a simple change.)
Back on track, one would think Parker is still keen on merging and should he find another major willing to commit to marriage than consolidation would seem to be inescapable in the industry as the other majors (CO/UA/AA/DL/NW) scrambled to find themselves partners.
Throw in Tilton's ability to manage (or lack thereof), keenness on merging and big bank backing and you have another big player who's got the merger bug. Disregarding the minor details (e.g. FF programs) the analysts seem to think a UA+CO merger would work and should CO choose to buy back their golden share, they'd loose a valuable defense against Tilton's minions and visions of merging.
…let me say this another way: should the share not be in place does anyone here NOT think Parker or Tilton would not have made a hostile takeover attempt at CO?
I'm not saying CO will never merge...rather that right now the Golden share affords them the security to do so on their own grounds and time. That said, if the US+DL deal went through I'd bet you a semesters tuition that CO & UA'd be hooking up right now.
Anyway here's my point through all this: the share prevents hostile takeovers of CO - which from our standpoint is a good thing. I also *think* NW's emergence from BK will allow CO to buy back their option, should they choose to do so (I am not sure how long the 'window' for CO to buy back the share will remain open). Moreover the share will not impede CO from acquiring other companies down the road should they wish to do so. But most importantly: the share allows CO's management to remain intact and reduce the threat of hostile takeovers.