SEC opens Hawaiian Holdings probe
By Dan Nakaso
Advertiser Staff Writer
The Securities and Exchange Commission has opened an investigation of Hawaiian Holdings Inc., the parent company of Hawaiian Airlines, over a stock buyback program that benefited shareholders as the company's fortunes deteriorated.
Hawaiian Holdings disclosed in an SEC filing this morning that it has received notice of a "formal, nonpublic investigation" of the company and "several of its officers related to the tender offer that the Registrant (Hawaiian Holdings) announced on May 31, 2002, and that was subsequently consummated."
In a statement today Hawaiian Holdings said, "All our activities were proper and fully disclosed and we will cooperate fully with the SEC investigation."
Company officials declined further comment.
This morning, shares of Hawaiian Holdings were up 3 cents from yesterday to $1.35. The stock has rebounded from a low of 30 cents on Aug. 12.
Hawaiian Airlines filed for Chapter 11 bankruptcy protection in March after losing $60 million in 2002.
In May, U.S. Bankruptcy Judge Robert Faris removed Hawaiian Chief Executive Officer John Adams from any management role, saying Adams had failed to act prudently in carrying out the $25 million stock buyback. Faris also said Hawaiian received no benefit from a $500,000 transfer to Hawaiian Holdings shortly before it filed for bankruptcy protection March 21.
Boeing Capital Corp., which provides the majority of Hawaiian Airlines' fleet through leases, said at the time that the stock buyback and $500,000 transfer to Hawaiian Holdings amounted to fraudulent transfers.
Adams remains chairman of Hawaiian Holdings. The company, incorporated in Delaware, serves as a shell company that owns 100 percent of the outstanding common stock for Hawaiian Airlines. It has no staff or operating capital, its attorneys have said.
Last month, Faris ruled that Hawaiian Holdings should get access to confidential information that has been sealed in the bankruptcy proceedings. Hawaiian Holdings said it needed the information to understand the case and may eventually write a plan for bringing the state's largest carrier out of bankruptcy.
Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.
