Former Secretary of the Navy John F. Lehman Jr. has agreed to lead an effort to take over and restructure the parent company of Pan American World Airways, the financial firm organizing the effort announced Thursday.
Steven Hoffenberg, chairman of New York-based Towers Financial, also said in a telephone interview that the board of Pan Am Corp. has agreed to provide the investor group led by Lehman with the "relevant information needed" to continue study of a restructuring.
For months, Pan American's unions have been seeking an investor to provide new capital and make some management changes at the corporation. Four of the five major unions that represent Pan Am employees have formed a coalition called the Joint Labor Council to pursue the matter.
Hoffenberg said Lehman met with leaders of the council Monday and told them that his group would seek about $180 million a year worth of pay and benefit concessions from the company's employees if the bid succeeds.
The Lehman group's proposal also includes an equity infusion of $50 million to $100 million, according to Hoffenberg, who said his company's involvement is limited to having "put together the financial package." Other details of the proposal were not disclosed.
Pan Am's current management, in a proposal the unions rejected earlier this year, asked for the same amount of concessions as that sought by Lehman. Another proposal in the works, by Beverly Hills financier Kirk Kerkorian, involves a higher level of employee concessions, according to a union official interviewed last month on condition that he not be identified by name.
Lehman, according to Hoffenberg, also told the labor coalition that his group would not break up Pan Am, as some other proposals reportedly have suggested. "Lehman wants to keep the company intact," Hoffenberg said.
Towers Financial, known as a leveraged buyout firm, has about $80 million in assets and owns Associated Life Insurance and United Fire Insurance.
Lehman, Hoffenberg said, has a contract with Towers Financial to lead the Pan Am effort and probably would become head of Pan Am's airline group if the plan succeeds. He added that he expects C. Edward Acker to retain his present position as chairman of the restructured corporation.
Lehman was secretary of the Navy from 1981 until early this year. When Towers Financial's interest in Pan Am was disclosed Oct. 12, the company said it was negotiating with Lehman and that it hoped to obtain his leadership for the effort.
Pan Am has had operating losses of more than $1.4 billion since 1980 and has a negative net worth, principally because it owes $600 million to its pension fund. It has sold off many major assets in recent years, including its all of its operations in the Pacific region.