Posted on: Wednesday, March 23, 2005

Aloha finds new investors

By Dan Nakaso
Advertiser Staff Writer

Aloha Airlines tomorrow will seek court approval to obtain up to $65 million from a joint venture involving an arm of Goldman Sachs to repay loans and continue operations while under bankruptcy protection, including paying the salaries of Aloha's 3,680 employees.

Goldman Sachs Credit Partners LP, a unit of Goldman, Sachs & Co., and Park Avenue-based Ableco Finance LLC have signed a term sheet agreement to each provide $32.5 million for a secured credit facility, according to documents Aloha has filed with the U.S. Bankruptcy Court in Honolulu.

The joint venture replaces a previous agreement in principle Aloha had with MatlinPatterson Global Opportunities Partners II LP, a private equity investment fund, to provide Aloha with up to $90 million.

In February, U.S. Bankruptcy Judge Robert Faris allowed Aloha to receive up to $4 million in the form of a bridge loan from MatlinPatterson and $1 million in liquidity from Aloha's credit card processor, First Hawaiian Bank.

Aloha's motion to allow the Goldman Sachs-Ableco Finance joint venture does not explain what happened to the MatlinPatterson arrangement. MatlinPatterson officials did not return telephone calls seeking comment yesterday.

Aloha spokesman Stu Glauberman said only that "MatlinPatterson has advised Aloha that it is not prepared to advance its proposal at this time."

If the joint venture is approved, Aloha will repay outstanding loans from a group of commercial lenders, additional revolving loans from Hawai'i banks and the MatlinPatterson loan.

The funding also will allow the airline to "obtain services in connection with their operations, including paying their employees, maintaining adequate cash balances and operating their business in order to preserve the ongoing value of their assets and enterprise for the benefit of all creditors," according to Aloha's motion.

Aloha had discussions with about 45 financial, strategic debt and equity lenders regarding potential sources of financing, according to its motion. About 20 executed confidentiality agreements and nine conducted detailed analysis of Aloha and its operations.

The Goldman Sachs-Ableco Finance joint venture provided the most favorable terms, according to Aloha's motion.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.