September 22, 2008
AMR Corp. Completes Sale of American Beacon
By DR STEWART
American Airlines' parent gets $480 million.
AMR Corp., the parent of American Airlines, has completed the $480 million sale of American Beacon Advisors Inc., its wholly owned asset-management subsidiary, to Lighthouse Holdings Inc., company executives said Monday. Lighthouse Holdings is owned by investment funds affiliated with Pharos Capital Group LLC and TPG Capital LP, two private equity firms.
AMR executives said the sale was primarily a cash transaction but that AMR will acquire a small equity stake in the parent company of Lighthouse Holdings.
The American Beacon sale has been sought by some AMR shareholders concerned about AMR's second-quarter net loss of $1.4 billion as well as its declining liquidity. AMR ended the second quarter with $5.5 billion in cash and short-term investments, a 14 percent decrease from 2007's second quarter, while total debt was $15.2 billion.
In another proposed divestiture, AMR executives said in July that the company had decided to place on hold its planned sale of American Eagle Airlines, its regional airline affiliate. AMR Chairman and CEO Gerard Arpey said the divestiture of American Eagle makes sense in the long term but not until industry conditions are more stable and favorable.
Formed in 1986, American Beacon has increased assets under management to $57 billion as of Aug. 31, AMR executives said.
American Beacon will continue to provide cash management services for AMR and its affiliates as well as investment advisory services and investment management services for American Airlines pension, 401(k) and other health and welfare plans.
"Having significantly grown our third-party revenue over the past several years, we believe the timing of the divestiture is just right for our company, our customers and our employees," said William F. Quinn, chairman of American Beacon.
Kneeland Youngblood, co-founder and managing partner of Pharos Capital, said American Beacon has proven to be an asset management business leader over the past 20 years with an outstanding performance record in multiple-asset classes across a variety of investment cycles.
Shares of AMR closed Monday at $11.30, up 91 cents or 8.8 percent. More than 36.3 million shares were traded.
D.R. Stewart 581-8451
Originally published by D.R. STEWART World Staff Writer.
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