Newsday from New York, New York • 69

i i i I I I I i i i i i V' tY'VV VvtVYYVrYtYtV QrogjgsqOTctntro I In the wake of the collapsed peter 3 March 31: Developer Donald Ueberroth offer for Eastern, the Trump announces he completed airline says it will reorganize into restructured deal to buy Eas- a smaller carrier Below, a chro- terns Northeast shuttle for $365 line company in return for wage and benefit concessions. April 10: After a week of negotiations, Ueberroth announces five-year deals under which Eastern unions would accept $210 million worth of concessions in return tor a 30-percent stake in the airline. notogy of major; events fn the nearly month-and-a-half-old I1 Much 4: Strike begins, canceling almost 90 percent of Eastern '-K. 'iyi-i' 1 March Eastern files for protec-fe tion from creditors under Chapter If ll In U.S. Bankruptcy Court in Manhattan, million.

The new deal gives him four additional Boeing 727s. April 4: Ueberroth's group makes a new offer to purchase Eastern, according to sources. Democrats withdraw from the Senate floor legislation requiring Bush to intervene in the strike. April Texas Air announces the Ueberroth group will, acquire-Eastern and a 19.9-percent stake -in the System One reservations system in a deal valued at $464 million. Under the deal, which needs approval from those in-- volved, Eastern employees would own 30 percent of the air- W-' group led by Peter submitted and buyout' Eastem.Sources may have been a higheroffer --4 a Jay Pritzker, Awociatadiraaa April 12: Ueberroth and announce his buyout proposal has collapsed because of an impasse with Texas Air over the unions demand that a trustee be named to head the airline until the purchase is completed.

Ueberroth says he will not make another offer and Eastern president Phil Bakes says the airline intends to reorganize as a smaller carrier serving 50 percent to 60 percent of its pre-strike schedule. 30: A 15 ball Commissioner Ueber-I roth says it with-drew, a proposal, for said nexas Air leanlng toward ImNM kOlUMAlMA from billionaire 1 SOURCE? Ths Rise and Fall of a Deal Things Are Up in Air At Eastern By Hany Berkowitz One day alter Peter V. Ueberroths deal to buy Eastern Airlines crumbled. Eastern creditors agreed to meet with Chicago financier Jay Pritzker today to hear about his competing bid while the airline and its unions began exploring alternatives. Lawyers for the airline, creditors and unions were also preparing for- a court hearing Monday that could lead to an auction of the company.

Meanwhile, American Airlines chairman Robert Crandall, who has expanded operations that compete with Eastern, said his compapy would be interested in buying any and all assets Eastern would like to sell, particularly routes to Latin America. Any asset thats available we would look at, Crandall told reporters in Miami after addressing a business group. Although Frank Lorenzo, chairman of Eastern parent Texas Air said he plans to rebuild Eastern as a smaller airline with new employees to replace strikers, federal bankruptcy judge Burton Lifland asked lawyers for Eastern, unions and creditors to meet today in Manhattan with bankruptcy examiner David I. Shapiro to discuss other options. Our mandate is to explore a wide range of alternatives, to try to get Eastern planes flying as quickly as practical, and there are no limits on the kinds of alternatives we will explore, said David Boies, special counsel for Texas Air.

Industry analysts and union officials called Lorenzos plans unrealistic, citing problems he faces hiring new pilots, and the airlines tarnished image. Under consideration are options ranging from selling all or parts of the airline to liquidating it, which officials call a last resort but which analysts consider increasingly likely the longer the strike and the bankruptcy proceedings continue. Pritzker, who controls the Hyatt hotel chain, was to meet today with some members of tjie creditors com- Issue of a trustee killed Ueberroths plan airline, is an extremely rare step. But when Ueberroth decided to buy Eastern for a complex package worth about $464 million, he had agreed that Lorenzo and his executives would keep control of the airline until the deal was completed. Lorenzo clearly didnt want to be unceremoniously kicked out through the use of a legal maneuver usually reserved for the most venal and corrupt executives.

Court-appointed examiner David I. Shapiro played a key role in forging the agreement, haranguing the unions into action. Lifland gave Shapiro broad powers to bang heads together to reach a settlement Shapiro, known as a no-nonsense lawyer, had rushed back from Alaska, where he was organizing class action suits against Exxon Corp. because of the Valdez oil spill, to take the case. The deal with Ueberroth was announced April 6, the day Shapiro returned, and he immediately took control of the negotiations with the machinists, pilots and flight attendants unions.

Ueberroth had set a deadline of midnight Tuesday for an agreement with the unions. He was the gorilla, one lawyer said of the beefy Shapiro. He was overbearing, impossible, 2 outrageous. The talks were aided by the realization among the unions that, this time, they needed to make concessions. Ueberroth offered employees a 30-percent stake in the airline, similar to what they held before Lorenzo By Glenn Kessler In the end, Peter Ueberroth, the master negotiator, apparently made a promise he couldnt keep.

It may have cost him an airline. Ueberroths deal to buy Eastern Airlines died after a week-long, emotional roller-coaster ride for dozens of exhausted negotiators. It was a week of triumphs most notably the forging over three days of a $l-billion package of labor concessions, which had eluded Eastern chairman Frank Lorenzo for three years. But it was mostly a week of bruised egos, frayed tempers, damaged reputations and, ultimately, defeat. The action moved with startling speed from Washington, where Ueberroth and his partners put together the labor accord, to the ornate former Customs House at the tip of lower Manhattan that contains the U.S.

bankruptcy court, where Eastern filed for bankruptcy protection on March 9. Eastern, its striking unions and Ueberroth were under intense pressure from U.S. Bankruptcy Judge Burton Lifland to get the planes flying. But that pressure may have helped unravel the deal despite the potential for compromise as economic and legal realities were ignored in the rush to fulfill the order. Ueberroth, the former baseball commissioner, reached his landmark pact with the unions because he agreed to their key demand that Lorenzo be replaced by a court-appointed trustee during the transition period before Ueberroth took full control of the carrier.

An appointment of a trustee, who would have run the Please see DEAL on Page 64 Please see EASTERN on Page 65 City Gives Up on Buying Theater Leases NEWSOAY, FRIDAY, APRIL 14. 1989 BUSINESS61 The entertainment strip, on 42nd Street between Seventh and Eighth Avenues, is viewed as crucial to the success of the long-delayed Times Square plan, which includes four office buildings and a wholesale merchandise market. The last thing I was going to get into with public funds is an Atlantic City roulette game, Stuckey said and begin renovating the properties for temporary uses such as rehearsal space for dance groups until the redevelopment project went forward. City officials had talked about paying $2 million for the long-term leases for the seven theaters. They saw this as an investment in establishing reasonable values for the properties when the city-state redevelopment project begins condemnation next month.

By Patricia Fisher and Paul Marinaccio The city has pulled out of negotiations to buy leases of a pornographic movie house and a string of other crime-ridden movie theaters along 42nd Street, abandoning a strategy officials had said would speed the redevelopment of the Times Square area and keep condemnation costs down. Instead, city Public Development Corp. President James Stuckey said yesterday, the city is pulling out, among other reasons, because the company that controls the leases, 42nd Street claims to be close to finalizing a deal with another developer. Just five weeks ago, the Public Development Corp. said it had expected to close the theaters by this month Please see THEATERS on Page 63 1 4 1 I 11 vV a a 1 J) Vf TfJ 9 1.