Hedge Funds Examine Airline Merger

Filed in archive Dealtalk on February 3, 2007

Since Delta Air Lines revealed that they are looking at reorganization strategies for their business plan, including a possible merger that is said would improve service, hedge fund share holders have been scrutinizing their every move.

US Airways has offered to buy Delta in an $8.4 billion bid, before before Feb. 7th when the U.S. Bankruptcy Court for the Southern District of New York holds a hearing on Delta's disclosure statement.

The group of unsecured creditors that are questioning the merger is made up largely of hedge funds holding billions of dollars in claims. The hedge fund team said in a statement that they "look forward to analyzing carefully and discussing with Delta the proposed plan and the assumptions upon which it is based however..... it expects Delta to consider alternatives to its proposed stand alone chapter 11 plan to ensure that creditor recoveries are maximized."

The Unofficial Committee of Unsecured Claim-holders includes 18 hedge funds and investment management companies that hold $2.35 billion worth of creditors' claims against Delta and its subsidiaries. If approved, the decision will be submitted to a vote of all creditors.