Bloomberg News

AMR Sees ‘Reasonable Possibility’ of Shareholder Value

January 09, 2013

AMR Sees ‘Reasonable Possibility’ of Value for Shareholders

AMR Corp., which is considering a merger with US Airways Group Inc., notified the Office of the U.S. Trustee of the development in a Jan. 3 letter filed today with the Securities and Exchange Commission. Photographer: Andrew Harrer/Bloomberg

Jan. 9 (Bloomberg) -- AMR Corp., the bankrupt parent of American Airlines, says its value has “significantly appreciated” and there may be a recovery for shareholders, who generally receive nothing in bankruptcy cases.

AMR, which is considering a merger with US Airways Group Inc. (LCC:US), rose 44 percent to $1.30 at 4 p.m. in New York. It was the highest value since Nov. 28, 2011, the day before the carrier sought bankruptcy protection. The shares trade over the counter.

“Depending upon the ultimate strategic alternative adopted and pursued, there exists a reasonable possibility that there may be value for AMR equity holders,” AMR attorney Harvey Miller wrote in a Jan. 3 letter to the Office of the U.S. Trustee, which monitors bankruptcy proceedings. The document was filed yesterday with the U.S. Securities and Exchange Commission.

AMR’s $460 million of 6.25 percent convertible notes due in October 2014 climbed 3.9 percent to 96.25 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds traded at 17.75 cents after AMR filed for Chapter 11.

US Airways has been pursuing a merger with Fort Worth, Texas-based AMR since shortly after the larger carrier filed for bankruptcy. AMR has a board meeting scheduled for today at which it had hoped to be ready to decide whether to go ahead with a tie-up, people familiar with the matter said in December.

Within Weeks

Bruce Hicks, an American spokesman, declined to comment on the specifics of the airline’s board meeting, beyond citing Chief Executive Officer Tom Horton’s comment in a Jan. 3 message to employees that “we expect to bring this to a conclusion within a matter of weeks.”

“The U.S. Trustee could conceivably appoint an equity committee, although this late in the bankruptcy process, it would be quite rare,” Helane Becker, an analyst with New York- based Dahlman Rose & Co., said in a report today.

A combination of American, the third-largest U.S. carrier, and No. 5 US Airways, based in Tempe, Arizona, would create the world’s largest airline.

US Airways fell 0.2 percent to $15.13.

Miller, of law firm Weil, Gotshal & Manges LLP, wrote in the letter that AMR previously opposed the formation of an equity committee in the bankruptcy case to represent shareholders because “there did not appear to be a substantial likelihood” that they would receive “any meaningful distribution.”

Miller didn’t immediately respond to an e-mail or phone message seeking comment on the letter after normal business hours yesterday.

“Since January of 2012, the debtors have made remarkable progress in stabilizing their businesses and improving their prospects,” he wrote.

The case is in re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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