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More on the TWU Equity Distribution – July 8, 2013

July 9, 2013

AA StocksThe formula for distribution of stock to American’s unsecured creditors, including all labor groups, is complex and a number of members have asked for further clarification.

  • The TWU has negotiated for our members to receive actual stock with considerable value. This stock will be distributed directly to our members as soon as American exits bankruptcy – most likely in September. Upon receiving the distribution, members will be able to invest or cash-in the stock as they see fit. This arrangement is substantially better than equity deals negotiated by other unions that have required that stock or stock options be placed in union-controlled trusts.
  • The TWU Equity Distribution is part of an overall deal that we negotiated with other unsecured creditors, including the pilots, flight attendants, non-union groups, as well as corporate unsecured creditors such as Boeing and GE. The 120-day schedule and formula for distribution of stock is the same for all of these groups of unsecured creditors. By working with these other unsecured creditors, we were able to leverage a stronger equity deal for the TWU membership.
  • The purpose of the stock distribution is to pay off the Company’s debt to its unsecured creditors. If the stock price comes out at the break-even point (the price necessary to pay off the Company’s debt) and rises over the 120-day period, fewer shares than originally projected will be distributed to the unsecured creditors because it will take fewer shares to pay off the debt. If the stock price goes down below the break-even point (approximately $15.00 per share) over the 120-day period, unsecured creditors and TWU members will be entitled to receive the maximum available shares under the distribution formula.
  • Because the value of the stock may go up and down during the 120 days after initial distribution, stock distributions will be made in thirty-day intervals up to day 120. By averaging the price of the shares during 120-day period, the number of shares distributed to unsecured creditors will match up as closely as possible to the value of the claims of the unsecured creditors. If the share price comes out at a level sufficient to pay off these claims and stays at this level through day 120, the average AMT will receive shares worth approximately $17,500. But the actual value of our 4.8% of shares distributed to unsecured creditors will depend on how the shares perform in the market.
  • An example of how the stock price can affect the number of shares distributed is as follows. If the initial price per share is $16.31 (the price of US Airways stock last week), and stays at that price for 120 days then the unsecured creditors will be due 469,100,000 shares and TWU members will be given 4.8% of that grant, or approximately 22.5 million shares. However, if the price of the shares drops from $16.31 to $12.00 a share and stays at that level the unsecured creditors will be due 510,600,000 shares and our members will receive 24.5 million shares.
  • Some members may have heard that the IBT accused the TWU of “pocketing” 5% of our equity. This is a blatant lie. Five percent of the equity is temporarily held back to deal with mistakes in distribution caused primarily by faulty payroll data from the Company. If, as we hope, the mistakes are minimal, the five percent balance will be distributed to eligible members. Under no circumstances will the TWU keep any equity. This allegation is a joke when you consider the Teamsters’ long history of corruption, cases of embezzlement, and the fact that members’ dues are used to pay for Jimmy Hoffa’s housing allowance.

We’re Not The First Ones The Teamsters Have Lied To.
That’s Why They’ve Been Under Federal Government Supervision for 24 Years. 

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