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    NWA Shareholders Press Bankruptcy Payout

    Jan. 30, 2007
    As common in bankruptcy cases, Northwest has said it expects its old shares will be canceled when it emerges from bankruptcy, expected by June 30, 2007.

    MINNEAPOLIS (AFX) - A minority shareholder in Northwest Airlines Corp. is demanding that managers stop pursuing a bankruptcy reorganization that would leave shareholders with nothing, according to a letter filed with regulators on Monday.

    Jeffrey A. Altman of the Owl Creek hedge fund accused the company of breaching its duty to look out for shareholders' financial interests in a letter dated Friday and addressed to Northwest Chairman Gary L. Wilson.

    The letter said that if Northwest's directors won't represent shareholder interests, they should at least call a shareholder meeting. Northwest shareholders have not met since before the airline filed for Chapter 11 protection in September 2005.

    Northwest has said it expects its old shares will be canceled when it emerges from bankruptcy, expected by June 30, 2007. That's a common outcome in bankruptcy cases, where debtholders come before shareholders and there isn't enough money to pay all of them.

    Northwest is making an operating profit and has enough money to pay its debts as they come due, Altman wrote. Northwest's 'financial picture is considerably brighter than on the date it filed bankruptcy because of, among other things, lower fuel costs, higher ticket prices, and the near completion of its successful operating restructuring,' he wrote.

    Northwest has said it expects to report a pretax profit for 2006.

    In his letter, Altman claimed Owl Creek is part of a group of shareholders with nearly 30 percent of Northwest's stock. They have asked U.S. Bankruptcy Judge Allan Gropper to force the trustee in the case to appoint a committee of shareholders.

    Altman wrote that Northwest's bankruptcy attorney asked to meet with him to see if they could avoid litigation 'by agreeing to some accommodation,' but Northwest canceled the meeting 'with minimal notice and no explanation.'

    Northwest spokesman Bill Mellon said the airline had no immediate comment on the letter.

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