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Pinnacle BK jeopardized by greedy investor

Old 08-09-2012, 07:33 AM
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Default Pinnacle BK jeopardized by greedy investor

This DOESNT look good at ALL.

ARTICLE from dowjones.com

Pinnacle Airlines Corp. is accusing hedge fund and shareholder Meson Capital Partners LP of putting its reorganization at risk in order to squeeze value out of shares that are expected to be worthless.

Pinnacle is urging a bankruptcy judge to block Meson and fellow shareholder Wayne King from pursuing litigation to compel the regional airline to call a shareholder meeting to overhaul its board of directors. Pinnacle says it believes Meson and Mr. King would use the meeting to nominate themselves to serve as directors.

According to Pinnacle, the lawsuit is the latest in a string of actions showing that the out-of-the-money shareholders are willing to risk the company's survival, and thousands of jobs, for the chance of getting paid.
"These shareholders have consistently demonstrated their willingness to risk the debtors' entire reorganization---and the interests of all the debtors' constituencies---in an attempt to force the debtors to engage in a risky gamble to attempt to provide recoveries to equity holders," Pinnacle said Monday in a lawsuit it filed in bankruptcy court to enjoin the shareholders' litigation. Representatives of Meson and Mr. King couldn't immediately be reached for comment Tuesday.

Meson Capital, a hedge-fund manager that holds 894,000 shares of Pinnacle stock, and Mr. King, who holds 761,879 shares, on Aug. 1 sued Pinnacle in Delaware Chancery Court to compel it to hold a shareholder meeting for the purpose of electing new members to Pinnacle's board.
Meson and Mr. King for months have been urging Pinnacle to appoint shareholder representatives to its board. In March, just weeks before Pinnacle filed for bankruptcy protection, they wrote to shareholders to say that "there has never been more a critical time for Pinnacle stockholders to have proper representation."

However, Pinnacle says that without any economic stake in its restructuring, the shareholders don't have a legitimate interest in demanding board representation. "With no legitimate stake in the reorganization, defendants can have no intention but to wrest control of the restructuring away from the debtors and their creditors in an expensive and dangerous attempt to secure value for themselves," Pinnacle said. Pinnacle said the lawsuit is the latest of several actions by the shareholders to advance their interests without regard to those of the company or its creditors. For instance, Meson's managing partner fought Pinnacle's $74.3 million bankruptcy loan from key customer Delta Air Lines Inc., even though Pinnacle said the financing was the only option to save it from liquidation.

A bankruptcy judge approved the financing anyway, noting that the shareholders' willingness to gamble on Pinnacle's ability to secure alternate financing would also risk Pinnacle's demise. Mr. King and Meson most recently teamed up with other shareholders to seek more time to possibly sue Delta, accusing the airline of manipulating Pinnacle's bankruptcy for its own benefit. According to Pinnacle, that request shows that the shareholders would "abandon any prospect" of its reorganization for the chance to sue the regional airline's biggest customer in the hopes that litigation would yield enough cash to pay them.

Pinnacle says it hasn't given up hopes of reorganizing, despite a shift in Delta's strategy that is forcing Pinnacle to confront its own business plan, and warned that calling a shareholder meeting would be a dangerous distraction.

"The holding of the shareholders meeting would cause immediate and irreparable injury to the debtors' restructuring, and would impair the debtors' ability to maximize the value of their assets for the benefit of all their respective stakeholders and to present a successful plan or plans of reorganization that is fair and equitable to all parties," Pinnacle said.
The court will consider Pinnacle's request for a preliminary injunction at a Sept. 5 hearing, which is also when the court is slated to hear from the shareholders looking for more time to possibly sue Delta.

Based in Memphis, Tenn., Pinnacle operates flights between hubs and smaller cities for passengers who bought tickets from major carriers, counting Delta as its major customer. The company sought Chapter 11 protection on April 1.

Write to Jacqueline Palank at [email protected].
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Old 08-09-2012, 08:21 AM
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its like squall line after squall line of happy news here....good thing at least on the propside, everyone is already well insulated mentally with good doses of adult beverages and dreams of months off !! haha

too bad people like this cant be beaten with a shovel by each and every employee they screw over, mgmt included.
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Old 08-09-2012, 08:54 AM
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How is it greedy that the don't want to take a complete loss?
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Old 08-09-2012, 08:55 AM
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Originally Posted by AFOX1BRAVO View Post
How is it greedy that the don't want to take a complete loss?
No kidding. They got screwed by management just like everyone else and they're trying to protect their interests.

I hope they get the money they're after.
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Old 08-09-2012, 11:05 AM
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It's not an issue a lot of these shares were bought right before bankruptcy. At least that's what the union claims and said its a non factor.
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Old 08-09-2012, 11:30 AM
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Originally Posted by lolwut View Post
No kidding. They got screwed by management just like everyone else and they're trying to protect their interests.

I hope they get the money they're after.
Wow. Surprised to hear this from labor.

These guys want to elect themselves to the board of directors, liquidate the company, sell the assets to get their money back and screw EVERY single one of us and other stakeholders.

That is a stance labor has never taken.
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Old 08-09-2012, 11:59 AM
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Originally Posted by lolwut View Post
No kidding. They got screwed by management just like everyone else and they're trying to protect their interests.

I hope they get the money they're after.
they are the morons that invested in an airline........a regional airline at that....they should not get back any money unless it can be proven that the company intentionally tried to screw them over. They took a gamble on a shady place to begin with and lost.
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Old 08-09-2012, 12:17 PM
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Originally Posted by IBPilot View Post
they are the morons that invested in an airline........a regional airline at that....they should not get back any money unless it can be proven that the company intentionally tried to screw them over. They took a gamble on a shady place to begin with and lost.
Pinnacle lists $1.42 billion in debt and $1.54 billion in assets

Maybe someone was cooking the books?
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Old 08-09-2012, 12:25 PM
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Originally Posted by IBPilot View Post
they are the morons that invested in an airline........a regional airline at that....they should not get back any money unless it can be proven that the company intentionally tried to screw them over. They took a gamble on a shady place to begin with and lost.
Wait, are you talking about the investors or the lifers?

I kid, I kid!
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Old 08-09-2012, 12:29 PM
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Pinnacle BK jeopardized by greedy investor
Pinnacle has been jeopardized by mismanagement of the Phil T era. Don't blame these investors for what they are trying to do. For the first time, someone is trying to hold fire under Pinnacle's feet to actually demand accountability.

Pinnacle has already been jeopardized by the economy, price of oil, Delta's new TA, and a large 50 seat RJ fleet. No one was lending money to Pinnacle, only Delta came to the rescue to finance money and became the debtor-in-possession. Honestly, I wouldn't take out any frustration or anger on the investors trying to hold Pinnacle accountable and for them to try and get their money back. More power to them. They got taken along with the ride and screwed. If they only knew how badly Pinnacle underbid the ATL 900s and the Colgan Q operations, then maybe they wouldn't have invested as much as they did.
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