MINNEAPOLIS_Northwest Airlines said its creditors overwhelmingly approved its bankruptcy reorganization plan, another key step on its way toward emerging from bankruptcy protection next month.
An unofficial vote tally shows that almost 97 percent of creditors who voted approved the plan, the airline said on Wednesday. Final results will be filed in bankruptcy court in New York later this week.
A confirmation hearing on Northwest's reorganization plan is set to begin May 16, and Northwest has said it expects to emerge from bankruptcy in June. It has been operating under bankruptcy protection since Sept. 14, 2005.
Even though creditors approved the plan, several people have objected to it, including the Owl Creek hedge fund, which wants to block the claims given to unions in exchange for pay cuts and work rule changes negotiated during Northwest's reorganization.
The plan calls for Northwest's secured creditors to be paid in full, so they didn't get to vote on it. Most of Northwest's unsecured creditors are expected to be paid between 66 cents and 83 cents on the dollar, depending on the final amount of its debts, to be paid in shares in the newly reorganized company. The Northwest plan calls for its existing shares to be canceled, and those shareholders would receive nothing.
Last week Eagan-based Northwest Airlines Corp. said it had resolved objections by a group of investors who hold claims in the bankruptcy. The group had objected to several parts of Northwest's plan, such as its poison pill and requirements that two-thirds of shareholders approve any changes to the company's certificate of incorporation and bylaws. Northwest changed the two-thirds vote requirement to a simple majority and said those claims holders had agreed to support the plan.
"We appreciate our creditors' confidence in the Northwest plan of reorganization, which provides creditors with a stake in Northwest Airlines going forward and represents a substantial recovery on their unsecured claims," Northwest President and CEO Doug Steenland said in a prepared statement.
Northwest has said it expects to have a valuation of roughly $7 billion when it emerges, plus another $750 million when it sells new shares. In bankruptcy court filings it has projected 2007 revenue of $12.77 billion and a net profit for the year of $794 million.
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Northwest Airlines Corp.: http://www.nwa.com
Joshua Freed can be reached at jfreed(at)ap.org