Last night, Bloomberg News reported that a group of bondholders told the pilots union that it will support a stand-alone AMR Corp. restructuring plan only if a new board of directors is appointed.
The ad hoc bondholders group holds about $885 million in debt and includes JPMorgan Chase and Pentwater Capital Management and has previously said it was interested in providing financing for American Airlines' parent company's restructuring plan.
"The bondholder group intends "to be one of the primary negotiators of any plan of reorganization" because of its position as a material stakeholder in AMR, Gerard Uzzi of law firm Milbank, Tweed, Hadley & McCloy LLP, wrote in the letter dated Nov. 15.
"AMR said in August that the ad hoc group was interested in providing financing for a restructuring, and the company won bankruptcy court approval in September to move forward on talks with the ad hoc bondholders. American will pay for the 12-member group's advisers.
" 'Our support for a stand-alone plan of reorganization for AMR will be conditioned, among other things, on that plan providing for the naming of a new board of directors,' Uzzi wrote in the letter," the Bloomberg article said.
On Wednesday, Gimme Credit senior bond analyst Vicki Bryan weighed in on the new development, saying the bondholder group could be planning to replace the board with members that are more favorable to a merger with US Airways.
"We suspect this ad hoc bondholder group with its "exit financing with a catch plan" might be reading the tea leaves the same way we are, and if it can convince all of AMR's stakeholders that a merger with US Airways is their goal it might help to fast track an efficient path for the carrier to exit bankruptcy with a more promising future of growth with sustainable profitability and full support of its employees," Bryan said in a research note sent to investors.
The Allied Pilots Association is currently holding a ratification vote on the latest contract offer from American Airlines. Voting ends on December 7.