Bronner Looks To Sweeten US Airways Deal

December 5, 2002 ( - Ever the wheeler-dealer, Alabama's pension fund is looking to improve the deal struck to buy 37.5% of US Airways.

David Bronner, CEO of the $25 billion Retirement Systems of Alabama (RSA), met with airline officials Wednesday in Montgomery, according to Dow Jones.   “We are re-trading the deal. We want more,” he said, according to the report.

In late September, just after complaining that the bid from RSA interfered with its bankruptcy reorganization plans, US Airways reversed course, and accepted the $240 million bid from RSA for a 37.5% equity stake in the restructured airline (see  US Airways Reverses Course; Works out RSA Deal ).

Better Bidder?

At the time RSA made the bid (see  Alabama Fund Makes a Bid for US Airways ), the fund claimed its bid was 20% more than a proposed competing bid from Texas Pacific Group – since it wouldn’t request any of the transaction fees (some $7.5 million to $10.5 million, including underwriting fees) contained in the offer from Texas Pacific.

Bronner told a state pension panel yesterday that the original offer included RSA controlling 5 of the 13 seats on the US Airways board of directors – but that he now wants a majority (7 seats), according to the Dow Jones report.   Bronner said he either wants to reduce the $240 million investment, receive preferred stock or find another way to improve the deal.

According to the report, Bronner characterized the deal as “in flux,” noting that the RSA was awaiting more information from a revised reorganization plan US Airways must file this month with the bankruptcy court. The airline sought bankruptcy protection in August.

High Profile Investments

Bronner has been no stranger to high-profile investments that seek to help the fund and the state simultaneously. He has spearheaded building of a statewide network of public golf courses intended in part to draw tourists, and he has helped lure new manufacturing with moves like the loan RSA gave the state to provide tax breaks for a Mercedes plant. He has put together two Alabama-based media companies that own dozens of television stations and more than 200 local newspapers nationwide.

In an upcoming article in PLAN SPONSOR magazine, Bronner characterized the US Air deal as simply about getting the most out of a tenuous situation—something he has done since the beginning in Alabama. “We already had $340 million invested in US Air [debt]; we have since the 1970s. What you are really trying to do there is protect the investment as much as you can.”

Bronner also noted, “We might as well go in and see if we can help the company and help ourselves.'” And the investment could generate new jobs in the state, he says, if Arlington, Virginia-based US Air opens facilities like a regional jet maintenance center or a reservation center there.

This year Bronner marks his 30th anniversary as the fund’s chief, which Frank Ready, who has known him a quarter-century and who is executive director of the Public Employees Retirement System of Mississippi,  says makes him the nation’s senior state fund director. The $25 billion RSA, which includes the 177,000-member Teachers’ Retirement System and the 103,000-member Employees’ Retirement System, had just $500 million in assets when he arrived.

Judy Ward contributed to this article.

NOTE :  an update to this article is available:   USAirways Cuts A New Deal With Alabama Fund