Saturday, February 25, 2006

Trouble Brewing at Sun Country?

A partnership holding a minority equity interest in Sun Country has filed a suit in a Minnesota court against the airline and other investors/management. One of the partners is a local entertainment attorney and the other is a real estate developer also located in the MSP area. The article suggests that the partnership feels that they deserved or were promised a bigger piece of the now expanding equity pie immediately following Sun Country’s emergence from bankruptcy. If that is the case, it seems a bit suspicious that it would be brought up by the partnership now…when the increased investment’s value would likely increase in an arbitrage-like fashion if the equity infusion takes place. Petters would not want to walk into the Sun Country equity purchase with a lawsuit hanging over it. That will give the partnership group some leverage with the company. We’ll keep an eye on this.

A bigger concern in our minds is the hint that Sun Country would focus the use of the new equity at MSP. Just because Northwest is weak, does not make them vulnerable. If anything, it makes them a more irrational competitor than ever.

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