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Yes, apparently thats the math. However, we'll have to wait until the total debt to creditors and labor unions are calculated.
As it stands now, AMR shareholders will get about as much as US Airways shareholders in $18.1 billion merger
By Terry Maxon
tmaxon@dallasnews.com
5:33 pm on November 27, 2013
We’re doing the calculations for the value of the American Airlines-US Airways merger. Oddly enough, it now appears that the value to AMR shareholders is about the same as it is for US Airways shareholders.
That didn’t seem likely back on Nov. 29, 2011, when AMR, American and their subsidiaries filed for bankruptcy. AMR stock dropped as low as 20 cents a share before closing at 26 cents that day.
But the structure of the AMR-US merger will give about as much stock in the new American Airlines Group to AMR shareholders as to US Airways shareholders, based on US Airways’ closing price of $23.98.
Here’s how we calculate, using estimates provided by Rothschild managing director Homer Parkhill in a filing on behalf of American/AMR on Saturday.
– The value of US Airways stock is $5.078 billion. That’s based on 211.75 million shares (diluted) X $23.98, Wednesday’s closing price.
– The value of the merger is $18.135 billion. That’s based on $5.078 billion being 28 percent of $18.135 billion.
That means that American/AMR’s share of the merger is $13.057 billion.
– Of that $13.057 billion, around $6 billion in stock will go to unsecured creditors and $2 billion in American’s labor groups.
– The remaining $5 billion or so will go to current AMR shareholders.
That’s a lot better than it looked back on Feb. 14 when American and US Airways announced the deal. AMR shareholders then were promised 3.5 percent of the new company. But officials held out the possibility for more if the value of the deal went up.
So it appears to be happening. But exactly how much goes to each group won’t be determined until the deal closes and other factors apply.
Time hasnt changed. It is at 10 am ET / 9 am CDT
All airlines are tanking today, nothing to worry about.
@JasonWhitely: Judge to Alioto: He's frustrated bc he can't find Alioto's arguments in the briefs he submitted.
Judge is destroying the plaintiffs of the TRO.
He is a shorty trying to spread fear. He is in the wrong place.
Glad I can help.
Started 3 mins ago now.
Follow @jasonwhitely on twitter. He's a journalist and is inside court room posting updates.
I previously posted this on AAMRQ message board in yahoo:
"The granting of the relief requested in the Motions will enable the Debtors to promptly consummate the Plan and close the Merger, and provide unprecedented recoveries to their creditors and AMR shareholders. Indeed, based on current trading prices, the aggregate implied value to the Debtors’ stakeholders under the Plan is approximately $13.1 billion." (Docket 64 of the private lawsuit)
This was taken from www.amrcaseinfo.com from a filling made by AMR on Saturday 23rd.
So, considering total debt about 8 - 8.5 billion at most, AAMRQ shareholders would receive at least 4.6 billion at current LCC price, meaning around $ 13.70 / share.
They did.
I am gonna try to explain, as clearly as possible, where are we, AAMRQ shareholders, standing right now in terms of the merger:
-The DOJ settlement is already approved by Judge Colleen (cant remember her last name) on Nov 12th. There are some procedures that have to be made, but they wont delay merger date.
-The only person right now that has the authority to approve or not the merger is judge Lane. He already approved the plan on September but after the DOJ settlement, he has to re approve it.
-There is a civil suit that plans to delay the merger. They plaintiffs will probably ask for an order of restriction today. However, Judge Lane, who sees the case, will probably dismiss it as shown by reports from yesterday.
-On Monday 25th 10am ET there is a hearing with judge Lane and it is expected that he will clear the merger. After that, some procedures have to be made. The merger is expected to be finalized mid December.
That timetable is for the DOJ settlement, it wont delay the merger.
Besides, the title of that article is:
District judge lays out timetable for finalizing the American Airlines-US Airways settlement
Dont mis inform please.
Its all BS. The only thing I was worried about is that it may have delayed The merger, but the news I previously posted, apparently dismisses that.
Im now more confident than ever that the merger will be cleared on Monday.
Nothing much happened at Wednesday’s antitrust hearing, we hear
By Terry Maxon
tmaxon@dallasnews.com
3:34 pm on November 20, 2013
We weren’t there. But we hear that not much happened when U.S. Bankruptcy Judge Sean Lane conferred Wednesday afternoon with attorneys on the status of a private antitrust lawsuit to block the American Airlines-US Airways merger.
In a report afterward, CRT Capital analysts Kevin Starke and Michael Derchin said the conference “did not move the needle either way in terms of gauging whether our estimated December 4 exit date is the right day to use, but it crystallized the issues.”
Wrote the CRT analysts:
“In today’s hearing, Judge Lane was bewildered as to why the antitrust litigants didn’t file a motion for a temporary restraining order (TRO) in the time that has elapsed since August 13. They were not procedurally barred from doing so, he averred. He invited them to file a TRO motion, and we would expect to see this hit the docket by tomorrow.
“Judge Lane gave the impression that he must allow them to file this in order to comply with the letter of the law on procedure, but he also seemed to indicate that such a late-filed motion would be somewhat prejudiced (though not prejudged, if such a nuance can be asserted).”
Side note: We have been hearing of a Dec. 9ish exit date.
We’re told that plaintiffs’ attorney Joseph Alioto said the plaintiffs could be ready to go to trial after a short period of discovery. He and fellow counsel David Cook have advocated a December trial.
Wrote Starke and Derchin:
“Judge Lane seemed to be very skeptical of the ability of the parties to present the issues on such short notice. And since it would seem unlikely that he would grant the TRO, the Plan of Reorganization is likely to go effective and the merger to be consummated, which would make the adversary proceeding equitably moot. There is still some risk, though, that he grants the TRO and lets the litigation proceed, and holders of AMR claims and equity interests will need to be mindful of this.”
The entire conference lasted less than a half hour, we’re told, and that the attorneys for American Airlines, US Airways and unsecured creditors committee didn’t even feel the need to say anything.
In any case, American and parent AMR go before Lane on Monday to ask him to give final approval to their plan of reorganization and allow them to exit bankruptcy proceedings. That plan includes a merger with US Airways upon exit.
The airlines on Nov. 12 had settled an antitrust lawsuit filed Aug. 13 by the U.S. Department of Justice and a number of states. The hearing Monday is to determine if the settlement significant affects the plan of reorganization, which the judge, US Airways shareholders and AMR creditors and shareholders had previously approved. The judge’s approval had been contingent upon wrapping up the DOJ
Very low volume.
Im expecting it to jump as soon as there are news about todays hearing at 2pm.
Hearing is scheduled for today at 2pm ET. This is the last hurdle, in my opinion, that has to be resolved so the merger can finally get approved on Monday.
Get ready for some action late in the day.
American Airlines: We don’t have to wait 60 days to close the US Airways merger
By Terry Maxon
tmaxon@dallasnews.com
3:34 pm on November 19, 2013 | Permalink
The latest issue in the private antitrust lawsuit against American Airlines and US Airways is whether federal law requires a 60-day waiting period before the carriers can finalize their merger.
In a filing last Friday, the plaintiffs said the airlines must wait. In a filing Tuesday in U.S. Bankruptcy Court, American said emphatically that there’s no requirement to wait.
The issue was raised by the plaintiffs’ attorneys, who have argued that last Tuesday’s settlement with the U.S. Department of Justice will delay a merger for at least 60 days while interested parties can comment. They want a mid-December trial.
“Setting this case for trial would not upset the settled expectations of the Debtors [American and parent AMR] because the Debtors did not and does not expect any type of resolution until late January, 2014,” plaintiff counsel David Cook said in his Friday evening filing.
However, American asserted Tuesday that the 60-day comment period doesn’t prevent American from going ahead with its merger if it gets the necessary approvals next Monday from U.S. Bankruptcy Judge Sean Lane. It’s a comment period, not a waiting period, the airline said.
Federal law “does not prohibit the parties from closing the Merger. … Defendants’ settlement with the DOJ permits the parties to close their Merger immediately,” American stated in its filing Tuesday.
This will all be debated Wednesday morning when the plaintiffs and the airline face off in Judge Lane’s courtroom. The plaintiffs want the judge to set the schedule for a trial.
The two airlines have targeted a closing date before mid-December.
Read my previous posts. I dont think I can explain it any better.
In that formula, AAMRQ is the price that your shares will be valued.
For example, if LCC is at 24.40 (yesterdays close)
AAMRQ = 1.582 x 24.40 - 22.96
So your AAMRQ shares would be valued at 15.64
In that formula, AAMRQ is the price that your shares
- At the day of the merger 3.5% of your shares will be converted to AAL using the formula AAMRQ = 1.582 x LCC - 22.96 (this is the corrected formula). Those are the only shares available to trade. Rest of the shares are locked.
- Every 30 / 60 / 90 / 120 days after merger, 25% of your remaining AAMRQ shares will be converted, using the same formula, into AAL shares. The price of LCC (AAL) for that calculation, will be the average volume-weighted price of the last 5 trading days before the day you get the new shares.
We will get more than 3.5%.
But only 3.5% of our shares will be converted at The time of The merger.
The other 96.5% will be converted 30/60/90/120 after.
We will get more than 3.5%.
But only 3.5% of our shares will be converted at The time of The merger.
The other 96.5% will be converted 30/60/90/120 after.
The -22.96 is the most accurate I have seen through every source I checked.
In fact, I have seen other formulas that use 1.61 x LCC - 22.96, but I will stick to the one I posted last:
AAMRQ = 1.582 x LCC - 22.96
Yes. Using your 7000 shares......
At the day of the merger only 245 of your shares will be converted to AAL.
30 days after, 1688 of your shares will be converted to AAL
60 days after, 1688 of your shares will be converted to AAL
90 days after, 1688 of your shares will be converted to AAL
120 days after, 1688 of your shares will be converted to AAL
Let me explain about the distribution:
-At the day of the merger 3.5% of your shares will be converted to AAL using the formula AAMRQ = 1.582 x LCC - 22.96 (this is the corrected formula). Those are the only shares available to trade. Rest of the shares are locked.
- 30 / 60 / 90 / 120 days after merger, 25% of your AAMRQ shares will be converted, using the same formula, into AAL shares. The price of LCC (AAL) for that calculation, will be the average volume-weighted price of the last 5 trading days before the day you get the new shares.
22.23 is the value that, using the formula, gives todays closing price of AAMRQ 12.20. In other words, if you think AAL will be below 22.23 in the 120 days following the merger, you should sell now, otherwise, keep your shares. I have no doubt that AAL wont trade as low as that, in fact, we should see 26-28 during that period.
Nice article from Barron's
US AIRWAYS GROUP (LCC) shares have gyrated based on news about the company's proposed merger with American Airlines owner AMR (AAMRQ), operating under bankruptcy protection. After the U.S. Department of Justice challenged the merger on Aug. 13, US Airways fell nearly 20%, to $15.34 a share.
Last Tuesday, however, the government agreed to let the $17 billion merger move forward with minor concessions. US Airways rose 1.7% on the week, to $23.89, and more gains could follow, even though the shares have climbed about 50% since mid-August.
Now that the legal fireworks appear over, investors can take a measured look at the result: the creation of the world's biggest airline, which will retain the more recognized name of American Airlines. Moreover, agreed-to concessions won't offset a projected $1 billion worth of merger synergies.
In recent years, consolidation has improved airline-industry health. But with just a handful of major airlines competing for their travel dollars, instead of the eight or 10 that existed 10 years ago, consumers likely will see higher fares.
US Airways shareholders will get 28% of the new company's equity, while AMR creditors and shareholders will receive the remainder. US Airways' respected CEO, industry veteran Doug Parker, will pilot the combined company.
The merger will allow US Airways' "best of breed operating practices" to be applied to the much larger American Airlines, says Philip Facchina, a portfolio manager at Ramsey Asset Management, which has owned US Airways shares for almost two years. He urges investors to look beyond 2014, with its inevitable merger-related "noise," to the 2015 earnings power of the two carriers, which he estimates at $4.00 to $4.50 a share.
US Airways stock is cheap compared to its rivals. Currently, the stock trades at a discount to Delta Air Lines (DAL), the biggest airline and a market favorite. US Airways sports a price/earnings multiple of 6.6 times 2014 estimated earnings, versus Delta's 9.
Delta trades for more than seven times 2015 estimates. The same multiple, applied to the portfolio manager's earnings forecasts for US Airways, would give the latter a price of $28 to $31.50 per share, perhaps in about 12 months.
Facchina also expects that the industry P/E will be re-rated higher as investors get more comfortable with the increased stability and predictability of airline profits. In time, this industry will look more like the rail business, he predicts. By comparison, the rails trade for 12 to 13 times estimated 2015 profits.
If US Airways were to trade for only eight times Facchina's 2015 earnings forecast, the stock would command a price in the mid-$30s, or 50% higher than Friday's close.
There are caveats, beyond the likely teething pains of the new company created through a merger. The industry needs the U.S. economy to keep expanding and jet fuel to remain around $3 per gallon. Short term, many AMR creditors who can't or won't own the stock probably will sell shares of the combined company, potentially creating an air pocket. And, airlines could fall into their bad habits of old.
But these negatives seem increasingly unlikely. Investors who board now could be taking advantage of an attractive entry point in what could soon become the world's biggest airline.
http://sierraworldequityreview.blogspot.com/2013/11/amr-corporation-aamrq-rating-and-10-day.html
Sierra World Equity rates AAMRQ as a buy and sets 10 day price target at $ 15.30. Thats a 30% upside from Friday's close.
I think it will trade sideways this week with some ocassional manipulated dips.
You may wanna load on or before Friday because on the 25th, after the judge gives the ok to the merger, price will shoot up.
LCC is a good play too, but, if you are looking for more profit (as we all are), AAMRQ is better.
First time I bought AAMRQ was the day of bankruptcy at 0.22, sold it 3-4 days later at 0.69. The lowest it went was 0.20.
Check the link below, it confirms what i said.
http://www.otcmagic.com/amr-corp-pink-aamrq-going-higher
AAMRQ never went as low as 0.10
You may also want to remember that we still need judge Lane's final approval on the 25th.
Very most likely it will give it but still some parties are complaining about the merger.
Check this link below.
http://aviationblog.dallasnews.com/2013/11/american-airlines-fights-plaintiffs-efforts-to-block-merger-and-schedule-a-quick-antitrust-trial.html/
Green!
$24 mark broken for LCC. Nice!!!
Yes, what slacker says is correct.
I was just making an example for easy understanding.
As I write this down, AAMRQ is at 11.72 and LCC 23.76.
For example, you own 1000 shares of AAMRQ and 500 of LCC. Imagine that the merger is made right now.
The new shares of AAL would start to trade at 23.76.
Your AAMRQ shares would be valued at 15.03 each or 15030 in total.
So you would receive 632 shares of the new symbol AAL.
And for your LCC shares you would receive exactly 500 shares of AAL.
All of this comes from using the estimated conversion formula.
Hope this helps you.
Estimate formula (posted several times) is:
AAMRQ = LCC * 15.82 - 22.56
Grats on that buy.
Im all dry right now. Loaded at 2.61, 7.02, 9.32 and 11.30.
Im just waiting for when I get my brand new AAL shares.
Yes, although i dont own LCC shares, in watching that stock more than im watching AAMRQ.