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Private Equity-Investment Firm to Acquire Air-Cargo Carrier AirNet Systems

Posted on: Friday, 28 October 2005, 09:00 CDT

By Tom Matthews, The Columbus Dispatch, Ohio

Oct. 27--AirNet Systems said yesterday that it has agreed to be sold to a private equity-investment firm for a price that a prominent shareholder contends is too low.

The Columbus company declined to identify the equity firm, which would pay $4.55 per share, then take the company private. The transaction would be worth more than $46 million.

AirNet said the unidentified buyer has until Nov. 30 to finalize a deal. The sale requires the approval of shareholders, whose annual meeting is Dec. 16.

The company said the sale would be positive for AirNet employees because it would give the company access to more capital and resources to build the business.

AirNet, based at Rickenbacker Airport, has 870 employees, with 420 in Columbus. Its core business of delivering canceled checks has dwindled as consumers and banks handle more transactions electronically.

It has been diversifying into other forms of express delivery and passenger charter service, credited with helping the company rebound from last year's $34.1 million loss to a first-half profit of $3.6 million.

Company officials declined to comment further.

But one shareholder was quick to characterize the selling price as being severely undervalued.

"I don't like the price,'' said Phillip Goldstein, managing partner of Opportunity Partners in Pleasantville, N.Y. In the past year, he has led a group of shareholders in opposing AirNet's strategies. He and his supporters control about 15 percent of the stock.

"Whoever is buying this for $4.55 (a share) is getting a steal. My only hope is a better bid comes in from someone else. Hopefully, somebody will look at this and say this company is worth significantly more.'' Goldstein said he thinks AirNet is worth closer to $5.70 per share. In the past year, the stock has traded between $2.73 and $5.44.

In fact, AirNet's stock was trading this week higher than the sale price. It closed Tuesday at $5.15 per share but tumbled yesterday on news of the sale, closing at $4.35.

The sale price is a premium of 32 percent on AirNet's closing stock price on Jan. 5, the day before it hired financial adviser Brown Gibbons Lang & Co. to look for a buyer.

Goldstein this year joined with other shareholders in forcing the board to name two of their representatives as directors. He said he does not know the identity of the buyer or its plans for the company.

"Two of the people I recommended are on the board and they are telling me the process is fundamentally fair,'' he said. "There is not much I can do.''

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Copyright (c) 2005, The Columbus Dispatch, Ohio

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ANS,

Source: The Columbus Dispatch, Ohio

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