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Pan Am to buy Carnival
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March 21, 1997: 10:06 a.m. ET
Reborn airline reaches agreement to acquire Carnival Air Lines
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NEW YORK (CNNfn) -Pan American World Airways announced Friday that it has reached a definitive agreement to acquire Carnival Air Lines.
Under terms of the agreement, Pan Am will arrange for a private placement of up to $30 million in a new series of convertible preferred stock. Primary Carnival shareholder Micky Arison will also make a $30 million capital investment.
Arison is chairman and chief executive of Carnival Corp., which operates Carnival Cruise Lines.
Pan Am said the financing, when combined with the additional investment from Arison, will provide Pan Am with some $60 million in additional liquidity.
Arison will then get approximately 9.5 million shares of Pan Am, which is 42 percent of the airline's outstanding stock.
Pan Am did not specify the value of the transaction.
Pan Am President and CEO Martin R. Shugrue Jr. said that Carnival's route system and modern fleet were the main draws for the acquisition.
"The Carnival Air acquisition elevates Pan Am to a stronger competitive position and provides significant benefits of critical mass in an expedited, yet controlled manner," he said.
It was not the first overture Pan Am had made for Carnival. Last July, the carrier agreed to pay about $100 million for Carnival Air but the deal was called off after Pan Am examined the carrier's books and sought to rework the terms.
Carnival Air was formed in 1988 and currently operates a fleet of 27 jet aircraft between South Florida, the Northeast, California and the Caribbean. It had about $270 million in revenues in 1996.
The new Pan Am began offering flights from New York to Los Angeles, Miami, and San Juan in September of 1996. The previous incarnation of Pan Am went bankrupt in late1991.
-- Randy Schultz
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