$125 Million Bid for Mesaba Claim Against Northwest

Feb. 1, 2007
"I am significantly more optimistic that we will be able to pay creditors in full," Robinson said.

Mesaba Airlines' claim in the Northwest Airlines bankruptcy case fetched more than 86 cents on the dollar Monday, when multiple bidders expressed interest in buying the claim.

Today, U.S. Bankruptcy Judge Gregory Kishel will be asked to authorize the sale of the claim to Goldman Sachs.

Tim Robinson, an attorney for the Mesaba creditors committee, said Monday night that the claim sale will generate about $125 million.

"I am significantly more optimistic that we will be able to pay creditors in full," Robinson said.

Mesaba, which provides regional flight service for Eagan-based Northwest, received an unsecured claim in the Northwest bankruptcy after Northwest skipped some payments to Mesaba and reduced its fleet.

Under Northwest's bankruptcy plan, unsecured creditors will receive stock in the newly restructured Northwest. In the current employee newsletter, Northwest CEO Doug Steenland emphasized that the value of the Northwest claims "has risen dramatically in recent months as confidence in our future has increased."

Northwest had valued the Mesaba claim at $145 million. Robinson said the claim was sold in two tranches, with one selling at 86 cents on the dollar and the second selling at 86.25 cents.

Mesaba has estimated that the total allowed claims in the Mesaba bankruptcy case will be about $90 million, which is why Robinson said it is likely that creditors will be satisfied.

Remaining proceeds from the $125 million claim revenue are expected to go to MAIR Holdings. Northwest is using the claim sale to buy Mesaba from MAIR Holdings. The regional carrier will then become a wholly owned subsidiary of Northwest.

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