Northwest Shares Could Debut Overpriced

Sunday May 20, 3:34 pm ET
By Joshua Freed, AP Business Writer

Northwest Airlines Shares Could Debut Into Headwind As It Emerges From Bankruptcy

MINNEAPOLIS (AP) -- Northwest Airlines Corp. is hoping for the highest valuation in its history when it emerges from bankruptcy protection May 31. But there are signs that it may be a little rich for some investors.

Creditors were offered new Northwest shares at $27 each, but more than 90 percent of them went unsold. Underwriter JP Morgan Securities Inc., which has to buy anything unsold from the $750 million offering, believes they're more likely to trade closer to $24 a share, according to a bankruptcy examiner's report issued last week. Northwest shares are set to begin trading on the New York Stock Exchange on a when-issued basis Monday and begin regular trading May 31.

In addition, several investors lost interest late last year when climbing prices for Northwest's debt suggested a market value of $7 billion, according to the examiner's report. Northwest no longer plans to seek $150 million in private investment it had once considered.