Mike Spector and Jack Nicas, writing for The Wall Street Journal, report that Indigo Partners LLC, a Phoenix-based private-equity firm, and Anchorage Capital Group LLC, a New York investment firm, are competing to take control of Frontier Airlines, sources familiar with the matter said. According to the report, the people close to the negotiations said the two investment firms are in discussions with Republic Airways Holdings Inc., which acquired Frontier out of bankruptcy in 2009. WSJ says a deal could be valued at more than $1 billion including debt, said people close to the negotiations. The sources said the discussions remain at an early stage and could fall apart. They said a handful of possible suitors have expressed interest in Frontier, with Indigo and Anchorage emerging as the most serious potential bidders. The sources also told WSJ under the contours of a deal currently being discussed, a buyer would pay between $20 million and $50 million to purchase Frontier from Republic and then recapitalize the airline with an additional $100 million to $150 million. A buyer would also assume hundreds of millions of dollars of liabilities. Another scenario under consideration is Republic keeping a minority stake. Indianapolis-based Republic purchased Frontier out of bankruptcy for $109 million and assumed $1 billion in debt and aircraft-lease obligations. According to the report, Republic disclosed in April 2012 that it had hired bankers at Barclays Capital to seek buyers for Frontier. WSJ notes Indigo specializes in airline investments. Indigo, run by former America West Airlines CEO William A. Franke, bought Spirit Airlines Inc. in 2006. Indigo also has investments in discount carriers including Tiger Airways Holdings Ltd. in Singapore, Wizz Air Hungary Airlines Ltd. in Hungary, and Volaris in Mexico. Mr. Franke has also teamed up with TPG founder David Bonderman on investments such as Ireland's Ryanair Holdings. Mr. Franke also hired US Airways Group Inc. CEO Doug Parker as finance chief at America West before it merged with US Airways. WSJ relates Anchorage focuses on distressed-debt trading and sectors including airlines. Anchorage also has a stake in Spirit. Its co-founder, Kevin Ulrich, is best known for sitting on the board of film studio Metro-Goldwyn-Mayer Inc.'s corporate parent after forgiving large debt holdings for significant ownership of the Hollywood company during a streamlined bankruptcy reorganization. About Frontier Airlines Based in Denver, Colorado, Frontier Airlines -- http://www.frontierairlines.com/ -- is the second-largest jet service carrier at Denver International Airport. Frontier Airlines Holdings Inc. and its affiliates filed for Chapter 11 protection on April 10, 2008 (Bankr. S.D.N.Y. Case No. 08-11297 thru 08-11299). Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represented the Debtors in their restructuring efforts. Togul, Segal & Segal LLP was the Debtors' Conflicts Counsel, Faegre & Benson LLP was the Debtors' Special Counsel, and Kekst and Company was the Debtors' Communications Advisors. In June 2009, Republic Airways Holdings offered to acquire the Debtors' assets for $108 million. In July 2009, Southwest Airlines countered with a $113.6 million bid. In August 2009, Republic won the bidding, paying $109 million and assuming about $1 billion of debt and aircraft-lease obligations. In September 2009, the Bankruptcy Court confirmed the Company's Plan of Reorganization which was premised on the Republic deal. Republic closed the deal in October 2009. Frontier Airlines became a wholly owned subsidiary of Indianapolis-based Republic.
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