Coniston Partners Has UAL Stake, Will Seek Control of Board
NEW YORK (AP) _ The New York buyout firm of Coniston Partners disclosed today that it has accumulated a 9.7 percent stake in UAL Corp. and plans to seek control of the airline company’s board.
Coniston, which played a crucial role two years ago in the breakup of travel conglomerate Allegis Corp., the former owner of United Airlines, has spent roughly $333 million in recent months amassing 2.12 million UAL shares, said Coniston principal Paul E. Tierney.
In a filing with the Securities and Exchange Commission, Coniston said it plans to solicit consents from shareholders to reduce UAL’s board from 16 to five members, three of whom would be Coniston principals.
With control of the board, Coniston would be able to steer the company toward a sale, restructuring or recapitalization.
″We would like to see an extraordinary transaction of some kind take place that would bring stability to the company and be fair to the various constituencies,″ Tierney said in a telephone interview.
United Airlines would have no comment on Coniston’s stake, spokeswoman Sara Dornacker said from UAL’s Chicago offices.
Tierney noted that while Coniston has not proposed acquiring UAL, ″it doesn’t preclude our participating in some kind of transaction.″
The takeover battle for UAL began in August when billionaire Marvin Davis offered to acquire the company for $240 a share. UAL later accepted a $300-a- share, $6.75 billion buyout proposal from an employee-management group, but the deal collapsed last month when the bidders were unable to secure financing.
The announcement of the collapse of the UAL deal on Oct. 13 helped trigger a 190-point drop in the Dow Jones industrial average and turmoil in stock markets worldwide.
Earlier this week, investor Saul Steinberg stepped into the fray when he filed for federal antitrust clearance to buy up to 25 percent of UAL’s stock.
Tierney said that Coniston has been in touch with UAL’s unions but said it is too early to characterize the unions’ position.
UAL stock has swung wildly since the battle over the airline began, reaching a high of $294 before collapsing. In early trading on the New York Stock Exchange today, UAL had jumped $8 a share to $181.
″The shareholders have been hammered in the last few months,″ Tierney acknowledged, ″but we would like to strike a transaction that is good for employees - both union and non-union.″
In a statement, Coniston said its team of directors would seek to provide job security and ″ if desired, an opportunity for equity ownership″ for employees.
Coniston has reaped millions by buying into companies, pressuring for changes and then walking away with cash. It waged a bitter and unsuccessful proxy fight over Gillette Co., pressed for the leveraged buyout of Storer Communications and participated in the merger of Viacom International and National Amusements.
Only once has the partnership, run by principals Tierney, Keith R. Gollust and Augustus K. Oliver, actually acquired a company. Earlier this year Coniston took over TW Services Inc. after a bitter nine-month battle.
But a cold reception in the junk bond market last week forced Coniston to postpone the sale of some $1.15 billion in junk bonds needed to finance their acquisition of the remaining public shares of TW, which is comprised of the fast-food Hardee’s and Denny’s restaurants, among others.
In 1987, Coniston reaped about $460 million when Allegis bought back shares after agreeing to sell its Westin and Hilton International hotel chains and Hertz car rental business.
Coniston also endorsed the selection of Stephen Wolf as UAL chairman and John Pope as chief financial officer, both of whom would remain on the board if Coniston is successful in its plan to take over.
Tierney said that although Coniston has retained some ownership of UAL stock over the past two and a half years, the team sold virtually all of its position before the purchase by the pilots was disclosed. Coniston’s current stake was built up since then, he said.
″We believe this is a great franchise,″ Tierney said of United. ″It’s an airline which has taken meaningful strides forward in last few years. There’s no intention here to break up the company or sell it through liquidation. We want to see it grow and stabilize.″