Honolulu Star-Bulletin from Honolulu, Hawaii • 21

INSIDE 2005 could be a watershed year for the nation's "traditional" airlines. C6 Stocks and mutuai funds. C4-5 Hawaii mutual funds. C2 4 businessstarbulletin.com 529-4792 Business editor: Alan Vaughn avaughnstarbulletin.com 529-4792 Tuesday, January 4, 2005 Section 3 AFTERMATH How well did the resorts hold up in Thailand's tourism stronghold of Phuket? Find out inside. C2 awaiian to get less than $4M' eStanVGassiOads Starts on Page C14 Call 524-7827 Legals and Public Notices Page CI 1 from ousted CEO's companies By Dave Segal dsegalslarbulletin.com Bringing closure to a lawsuit that has clouded the Hawaiian Airlines bankruptcy, former Chief Executive John Adams and his affiliated companies have agreed to pay the airline $3.6 million in a settlement' over funds diverted from the carrier.

The amount was considerably less than the $28 million that Hawaiian Airlines trustee Joshua Got-baum had sought when he sued Adams' companies in November 2003. But company officials said negotiations revolved around roughly $3 million made in consulting agreements and other compensation to insiders and their Interests rather than a controversial $25 million stock buyback that made payments to investors in the summer of 2002. Arguments that Hawaiian's shareholders and creditors were harmed by the buyback have been diminished because its parent company's stock price is now nearly double the buyback's $4.25 price, and a proposed reorganization plan is offering unsecured creditors 100 percent on their claims. Gotbaum, who was appointed in July 2003 to see the company through bankruptcy reorganization and to investigate Adams and his affiliates, was pleased with the outcome. "This should close a sorry chapter in Hawaiian's history," Gotbaum said.

"Those funds will help complete our successful reorganization of Hawaiian." The settlement requires approval by federal Bankruptcy Court. A hearing is set before Judge Robert Faris on Jan. 25 to determine whether to approve a reorganization plan for Hawaiian. The carrier has been in bankruptcy since March 21, Under the settlement agreement, Adams and business partner Randy Smith disclaim any legal liability. The suit was filed against Adams; AIP LLC, which at the time was the controlling shareholder of Hawaiian Airlines parent Hawaiian Holdings and consulting firm Smith Management LLC.

Adams was the managing member of AIP and affiliated with Smith Management. lease see Hawaiian, C6 DENNIS ODA I DODAgSTARBULLETIN.COM John Adams, removed as chief executive of bankrupt Hawaiian Airlines, did not admit wrongdoing as part of a legal settlement with the carrier's trustee. Pearl shopping center sells at markup By Allison Schaefers aschaefersstarbulletin.com ma HIGHLANDS BUSINESS BRIEFS HAWAII Research firm initiates coverage of Cyanotech Investment research firm J.M. Dutton Associates has initiated coverage Big Island neutraceutical company Cyanotech Corp. with a neutral rating.

Dutton Associates said it believes Cyanotech can accelerate its earning per share growth to 27.5 percent a year, and that its shares are fairly valued. NATION Federated Stores chairman indicted Former Federated Department Stores Inc. Chairman James Zimmerman was indicted on perjury charges accusing him of lying to investigators probing claims he plotted to keep upscale tableware out of Bed Bath Beyond Inc. stores. The charges against Zimmerman, 60, who was also chief executive, were outlined in an indictment unsealed today, said Brad Maione, a spokesman for New York Attorney General Eliot Spitzer.

Federated, May Department Stores Co. and the makers of Lenox china and Waterford crystal agreed in August 2004 to pay $2.9 million to settle allegations they conspired to prevent Lenox and Waterford tableware from being sold in Bed Bath Beyond stores. Lennox and Waterford tableware are carried by Federated and May stores, including Macy's. Factory orders post strong gain WASHINGTON America's factories saw orders go up by a strong 1.2 percent in November, the biggest advance in four months and a sign that the nation's manufacturing sector was gaining momentum as the new year loomed. The latest snapshot of manufacturing activity, released by the U.S.

Commerce Department today, was even better than the 0.8 percent rise some economists were forecasting. The 1.2 percent increase, the most since July, followed a solid 0.9 percent gain in October. Today's report, along with one released yesterday, suggested the industrial sector hardest hit by the 2001 recession continues to gain ground and cement its recovery. Investor raps Molson-Coors deal TORONTO A second major shareholder of Molson Inc. condemned today as inadequate the financial terms of the company's proposed $6.6 billion merger with U.S.-based Adolph Coors the same day an influential U.S.

firm recommended Coors' shareholders support the deal. In a six-page note to its clients, Toronto investment firm Burgundy Asset Management Ltd. said that chairman and controlling shareholder Eric Molson is handing Canada's largest beermaker over to Coors at a bargain price because of "a fundamental valuation mistake" in merger negotiations with its Golden, partner. Pacific Stock Exchange to be sold CHICAGO Archipelago Holdings owner of the ArcaEx electronic stock market, announced plans to buy the San Francisco-based Pacific Stock Exchange for $50.7 million in a move that comes with stock exchanges maneuvering to diversify. The proposed deal was announced yesterday, less than five months after the Chicago based company went public.

One of the original four electronic exchange networks, Archipelago operates the Archipelago Exchange, an all-electronic stock market platform that allows trading across the New York Stock Exchange, the American Stock Exchange and the Nasdaq Stock Market. "1 Tr.r.nr..., 1 STAR-BULLETIN FILE An investment fund has bought the Pearl Highlands Center on Oahu at a premium to the price the center fetched when it was last sold in 2000. An investment fund managed by New York-based Morgan Stanley has purchased the Pearl Highlands Center, Oahu's seventh-largest shopping center, in a deal worth $113.5 million. Morgan Stanley Real Estate's Prime Property Fund, which manages close to $28.7 billion in real estate assets worldwide, said it bought the Kamehameha Highway property in a fee-simple transaction. Pearl Highlands, which was built in 1993, is anchored by a Sam's Club and home to a Regal Cinema, Pier 1 Imports and Ross Dress for Less.

The center is 98.7 percent leased with the majority of the leases extending through 2013 and beyond. The center's purchase price, about $267 per square foot, is 82 percent higher than what LaSalle Investment Management's Income and Growth Fund II LP paid to acquire the property in 2000. "The price represents a continuation of the value in Hawaii and is relative to the center's location," said Andrew Friedlander, chief executive and principal broker of Colliers Monroe Friedlander which Please see Highlands, C6 PEARL HIGHLANDS DEAL Sale price: $113.5 million Buyer: Morgan Stanley Real Estate's Prime Property Fund, which manages nearly $28.7 billion in real estate assets Size: 410,325 square feet Location: 1000 Kamehameha Highway, Pearl City Major tenants: Sam's Club, Regal Cinema, Pier 1 Imports Opened: 1993 3 radio stations shuffle ownership Aloha seeks infusion of cash to keep flying i I 1 I -11 i THEBUZZ Erika Engle Star-Bulletin staff and news services news-talker KHNR-FM 97.5; KHUI-FM 99.5, playing traditional Hawaiian music; oldies-formatted 107.9; KGU-AM 760, which airs Christian teaching and talk; and KAIM-AM 870 and KHCM-AM 1 170, which will share a morning show but will carry separate country-music programming for the rest of the day. The KAIM-AM transmitter is on Molokai and provides a clear shot to the eastern side of Oahu, while KHCM's West Oahu location covers that side of the island, said President and General Man- ager J. Malievsky.

Salem hired all but one radio personality from KGMZ, as former midday hostess Sista Sherry is primarily employed by Cox as a morning show co-host on KRTR-FM 96.3. Salem weekend personality Kat-rina Kellie has been promoted and will fill middays on the oldies station. The station's other full- and part-time personalities, including legendary radio man and concert promoter Tom Moffatt, have been hired by Salem. Cox's new station at 650 AM has been assigned the call letters Please see Buzz, C6 Prices at the pump Self-service cash price in dollars per gallon. Stations, except Lex Brodie 's on Queen Street, are in the general area bordered by King, McCully and Beretania streets, and Ward Avenue.

offered a $3 million loan from shareholders In the privately held firm, which is controlled by the families of the late real estate investor Hung Wo Ching and late local developer Sheridan Ing. The two co-owned and led the airline for years. "It shows people we have the cash to continue operating," Ban-miller said during a court break. "It sends a positive message to all the constituents we deal with." Banmiller's comments came on a day in which the airline largely got its way in axourt hearing that ironed out many of the rules of engagement between Aloha and its creditors and employees and bankruptcy authorities. Overruling a federal lawyer on several occasions, bankruptcy court Judge Robert Faris granted a number of motions by Aloha's attorneys aimed at keeping the airline aloft as it undergoes reorganization.

Please see Aloha, C6 The bankrupt airline has been offered a $3M loan by certain shareholders, the company's CEO says By Dan Martin dmartinstarbulletin.com Aloha Airlines, which declared bankruptcy last week, is in talks with prospective investors on throwing a financial lifeline to the struggling carrier, the company's chief executive said yesterday. Even as Aloha appeared for its first day in bankruptcy court, company President and Chief Executive David Banmiller said the airline was discussing possible debtor-in-possession financing arrangements, which he said are "often a prelude to equity investment." "We've been discussing opportunities with multiple parties," he said, offering no details. He said the airline also has been THREE Honolulu radio stations changed hands yesterday in the completion of a previously announced station swap. California-based Salem Communications Corp. took over KGMZ-FM 107.9 from Atlanta-based Cox Radio which in turn assumed operations of AM stations 650 and 940 from Salem.

Salem, doing business locally as Salem Media of Hawaii now owns and operates seven Oahu stations, the most allowed in a market this size: KAIM-FM 95.5 "The Fish," which plays contemporary Christian music; conservative Regular Midgrade Premium Unleaded Unleaded Unleaded Aloha $2,319 $2,399 $2,499 Lex Brodie $2,289 $2,369 $2,449 Chevron $2329 $2,429 $2,529 Tesoro $2.419 $2.5 19 Shell $2,329 $2,419 $2,539 VS. average price for regular unleaded gasoline $1,776 'Limited service provided Source: AAA-Hawaii STAR BULLETIN.