Ueberroth Deal to Buy Eastern Likely to Be Announced Today

Former baseball commissioner Peter V. Ueberroth is expected to announce in New York today that he has reached an agreement to buy Eastern Airlines, according to sources close to the Southern California businessman.

“Be alert bright and early tomorrow morning,” a Ueberroth adviser told a reporter.

J. Thomas Talbot, a Newport Beach real estate executive who is one of Ueberroth’s partners in the proposed deal, would not confirm that an agreement had been completed. However, in a telephone interview from his New York hotel room late Tuesday night, he said: “The facts speak for themselves. I wouldn’t be here unless there was a reason and a lot hadn’t been accomplished since I came here,” an apparent reference to negotiations that took place Tuesday.

Offered $464 Million

Ueberroth flew to New York from Orange County last night. Frank Lorenzo, chairman of Texas Air Corp., the parent of Eastern, was expected to be in New York as well to issue a joint announcement with Ueberroth. Details of the proposed deal were not available.

Eastern filed for protection from creditors under Chapter 11 of the Federal Bankruptcy Code on March 9. Any sale of the airline would have to be approved by U.S. Bankruptcy Judge Burton R. Lifland, who is presiding over the case.

Last week, Ueberroth offered $464 million for Eastern, whose operations have virtually grounded to a halt since March 4, when the International Assn. of Machinists launched a strike against the financially ailing carrier. Talbot said last Thursday that Ueberroth withdrew his bid when officials of Texas Air said they had received a higher bid from Chicago hotel magnate Jay Pritzker.

However, Texas Air officials said they had not rejected Ueberroth’s bid and let it be known that they were still interested. Sources close to the situation said that only $100 million of Pritzker’s $500 million bid was in cash, compared to $200 million cash in the proposed Ueberroth deal, apparently making the Pritzker bid less attractive to the Texas Air board.

Ueberroth’s initial offer for Eastern was for the entire company, including the lucrative Northeastern shuttle operation. However, Eastern agreed late Friday to sell the shuttle to New York financier Donald J. Trump for $365 million. Trump will get 21 jets as part of the deal, which also must be approved by the bankruptcy court.

Employees Get 30% of Carrier

An exhausted but elated Rick Chapman, a member of the Eastern pilots union executive council, said that he was told by Jack Bavis, president of the Eastern pilots union in New York, that the airline would be sold to Ueberroth.

“Everything is done except a signature,” Chapman said in a telephone interview from Miami.

Chapman said he anticipated that Eastern’s employees would own 30% of the carrier under the Ueberroth deal.

Still, another source cautioned: “With Lorenzo, until the last signature is on the page, there’s no deal.” He was referring to the fact that the Texas Air chairman has been reported to have ambivalent feelings about selling Eastern, despite its fragile financial condition.

Indications that a deal was imminent surfaced Tuesday when the expected appointment of a bankruptcy examiner for Eastern was put off.

There would be no need for an examiner if Eastern is sold and comes out of bankruptcy soon to resume full operations.

Neal S. Mann, assistant U.S. bankruptcy trustee for the Southern District of New York, said in an interview that the parties involved in the bankruptcy had asked for the postponement of the appointment until a meeting can be held today in the Lifland’s chambers.

Mann declined to say why the appointment had been postponed.

Move Process Along

Late Tuesday, Lifland issued a show cause order requiring U.S. Trustee Harry Jones to explain why no examiner had yet been appointed. Lifland set a hearing on the matter for 2 p.m. today.

“My surmise would be that the judge wants to move the process along,” said a source close to the Air Line Pilots Assn., referring to the possibility of a sale of Eastern.

Lifland last month ordered the appointment of an examiner. Eastern made the original request to the judge for such an official in hopes that Lifland would appoint an examiner rather than a trustee for the case. A trustee would have broader powers than an examiner and could be empowered to take over the company’s operations while it is in bankruptcy proceedings.

Eastern’s pilots and flight attendants have overwhelmingly honored machinists’ picket lines.

In ordering the appointment of an examiner, however, Judge Lifland said that official would be given broader powers than Eastern expected, though less power than Eastern’s unions would have liked. The examiner would be expected to review certain of Eastern’s financial transactions, to bring management and its creditors together and try to help end the strike.

A 15-member, court-appointed creditors committee, which is representing all of the airline’s unsecured creditors, let it be known Monday that it wanted potential suitors to come forth with their offers at a committee meeting Tuesday.

Some Bids Received

“Progress was made in general at the meeting of creditors,” Mann said, but he declined to be more specific. The meeting was closed to the press.

Carl C. Icahn, a New York financier who is also chairman of Trans World Airlines, had wanted to buy Eastern. However, sources said Lorenzo believed that TWA, buttressed by Eastern’s planes and routes, would represent a bigger threat to Continental Airlines, a non-union airline also owned by Texas Air, than Eastern owned as an independent carrier by Ueberroth.

Several financial analysts have expressed doubts about Eastern’s ability to survive unless it merges with another carrier.

In other developments Tuesday:

Texas Air said in an announcement from its Houston headquarters that it would not be paying the quarterly dividend on its four outstanding issues of preferred stock.

Lifland gave final approval to Eastern’s sale of three Boeing 727s to Federal Express. The planes are part of a transaction that had been agreed upon before Eastern declared bankruptcy. The other seven had been delivered earlier. Eastern got $10.8 million for the three planes, a spare engine and a power ground unit.

America West, based in Phoenix, said it remained interested in buying some of Eastern’s landing slots and gates at Washington National Airport and at New York’s LaGuardia Airport. These are two of the four U.S. airports that restrict the number of available slots and gates.

Robert E. Dallos reported from New York and Henry Weinstein from Los Angeles.