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Date Posted: 08:15:22 04/07/08 Mon
Author: Bob O. Link
Subject:

FLASHBACK TO ALOHA AIRLINES 1ST BANKRUPTCY

January 27, 2006

Aloha Airlines achieves deal to ascend from bankruptcy

By Dave Segal, Honolulu Star-Bulletin

Aloha Airlines has reached a new deal with its investors that soon could fly the carrier out of bankruptcy.

The company, whose emergence from bankruptcy was delayed last month by an appeal from the federal agency that guarantees pension plans, filed a motion yesterday seeking a hearing Tuesday before Bankruptcy Judge Robert Faris on a restructured reorganization proposal.

A NEW BEGINNING

Key features of Aloha Airlines' modified reorganization plan:

� $43.25 million in cash from the Yucaipa Corporate Initiatives Fund I LP

� $16.8 million in cash and converted debt from the Aloha Aviation Investment Group

� $2.2 million from Aloha Hawaii Investors LLC, consisting of the Ing family partnership of Richard Ing and his sister, Louise Ing Sitch; Hawaii developer Stanford Carr; Duane Kurisu; and Colbert Matsumoto

� $750,000 from GMAC

� $35 million in exit debt financing

� $4.5 million in cost savings

Aloha also is asking for a waiver of the 10-day comment period if Faris approves the new plan....

David Banmiller, president and chief executive of Aloha, said in a statement yesterday that he hopes the modifications allow for a successful completion of Aloha's bankruptcy reorganization and the recapitalization of the company.

"The new equity investment clearly strengthens Aloha's financial position and has the added advantage of participation by new Hawaii investors," Banmiller said.
Aloha's new plan includes $43.25 million in cash from the Yucaipa Corporate Initiatives Fund I LP, headed by billionaire grocery magnate Ronald Burkle, and $16.8 million in cash and converted debt from Aloha Aviation Investment Group, led by former National Football League star Willie Gault. Yucaipa's cash investment is a $10 million increase from its previous proposal.

In addition, $2.2 million in cash is coming from a new group, Aloha Hawaii Investors LLC, which consists of the Ing family partnership of Richard Ing and his sister, attorney Louise Ing Sitch, both of whom are among the current owners of the airline; Hawaii developer Stanford Carr; Duane Kurisu, who has Hawaii commercial real estate and communications holdings; and Colbert Matsumoto, president of Island Holdings Inc., the parent company of Island Insurance.

Kurisu and Matsumoto are board members of Oahu Publications Inc., publisher of the Honolulu Star-Bulletin and MidWeek....

GMAC, the finance arm of General Motors, also is putting in $750,000 in cash....

Included in the new cost savings are the elimination of a proposed $2 million note and $175,000 cash distribution to Aloha's unsecured creditors. The total amount of unsecured claims against the carrier is approximately $207 million, according to the motion, and it is uncertain how many cents on the dollar unsecured creditors will get. However, the motion said the recovery to unsecured creditors under the modified plan will be reduced by less than 1 percent from what creditors were going to receive under the previous plan. Under that plan, unsecured creditors were expected to receive less than 5 cents on the dollar.

The attorneys and advisers connected with the case also have agreed to reduce their fees collectively by $1 million.

Aloha said in its filing that all key constituents support the plan and that it must be approved expeditiously.

"If not," the motion said, "there is the distinct possibility that (Aloha) could run out of cash and would be forced to cease operating, rendering 3,500 residents of the state of Hawaii unemployed, and severely harming the state of Hawaii's passenger and cargo operations."

The new deal became necessary when investors Yucaipa and AAIG balked after Aloha failed to emerge from bankruptcy by a Dec. 15 deadline. Aloha's first reorganization plan was approved on Nov. 29.

Aloha, which filed for bankruptcy on Dec. 30, 2004, saw its goal of emerging from Chapter 11 in less than a year thwarted when the federal Pension Benefit Guaranty Corp. filed several last-minutes appeals last month. The agency and Aloha have since reached a tentative settlement, though details have not been disclosed.

Aloha blamed the PBGC's appeals and rising fuel prices for the need to restructure the deal.

"These cost increases make the original plan's capital and price structure unworkable," the motion said.

http://starbulletin.com/2006/01/27/news/story04.html

Honolulu Star-Bulletin
BOARD OF DIRECTORS
David Black, Dan Case, Dennis Francis, Larry Johnson, Duane Kurisu, Warren Luke,
Colbert Matsumoto, Jeffrey Watanabe, Michael Wo
Dennis Francis, Publisher
Lucy Young-Oda, Assistant Editor
Frank Bridgewater, Editor

# # #

http://www.kycbs.net/Aloha-Air-SB-1-27-6.htm

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