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Hawaiian Airline’s Stock Falls After Buyout Offer

August 22, 1989 GMT

HONOLULU (AP) _ HAL Inc. stock declined further in early trading today on the news that investors including former baseball commissioner Peter V. Ueberroth would buy control of the parent company of troubled Hawaiian Airlines for far less than the market price.

HAL’s board of directors unanimously accepted a tender offer of $22 a share from the group headed by J. Thomas Talbot, a former airline executive from Newport Beach, Calif. Investors include Ueberroth and his brother, John.

Last spring, Talbot and Peter Ueberroth headed a group that unsuccessfully bid $464 million for strikebound Eastern Airlines.

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HAL stock was down 87 1/2 cents at $24.37 1/2 a share in early American Stock Exchange trading today. The stock, which has been boosted in recent months by takeover rumors, fell $6.37 1/2 a share on Monday in heavy trading.

A source close to the deal, who asked not to be identified, said Talbot and Peter Ueberroth were equal partners in the buyout and that Talbot would likely become chief executive officer and Ueberroth co-chairman of the company.

The group plans to buy at least 51 percent of HAL’s stock. At $22 a share, it could purchase a majority of the company’s 1.95 million outstanding shares of common stock for about $21.9 million.

Honolulu stockbroker Randy Havre of J.B. Havre Securities Inc. said the offer was reasonable and estimated the stock’s true value at $15 to $20 a share.

″The bottom line is the employees are going to win on this because they’re getting new management which will reduce the instability caused by financial losses over the past few years,″ said Havre.

John H. Magoon Jr., chairman and chief executive officer of HAL, owns about 57 percent of the company. An airline spokesman said Monday that Magoon would sell enough of his shares to ensure the deal, but he was expected to stay on as chairman or co-chairman.

HAL lost $13 million in the first half of this year and has lost a total of $30.6 million over the past 2 1/2 years.

Last year, a subsidiary of Japan Air Lines paid almost $20 million for a 20 percent stake in the company.

In a critical article in June, Forbes magazine blamed Magoon for the airlines’ poor performance during an economic boom, saying he ″has managed to run the state’s leading carrier almost into the ground.″

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Hawaiian consistently has ranked among the industry’s leaders in consumer complaints compiled by the U.S. Department of Transportation.

Last week, John Ueberroth witnessed such discontent when his Los Angeles- bound Hawaiian flight departed four hours late, sources said.

Talbot acknowledged the airline’s problems but said his group would solve them by infusing the company with capital to buy better planes and equipment.

The investors, who were attracted by the airline’s routes in the Pacific Basin, also said they would boost Hawaiian’s image by improving and expanding service and sticking to schedules, he said.

″Performance is the key and making sure we operate on timely schedules will be a top priority,″ he said. ″These changes won’t happen overnight, but they will happen.″

The 60-year-old airline is the state’s largest inter-island carrier. It also serves Los Angeles, San Francisco, Seattle, Las Vegas, Alaska, Australia, New Zealand, American Samoa, Guam, Tahiti and other Pacific points. Its 31 planes carried 5.5 million passengers last year.

After graduating from San Jose State College in California in 1959, Ueberroth worked here for Trans International Airlines as an operations manager and vice president through 1962.

He has earned a reputation in professional baseball and as head of the Olympics for turning problem enterprises into moneymakers.

The tender offer must clear several hurdles, including the airlines’ unions, several government agencies and the company’s shareholders, HAL said.