Midwest investor pushes for AirTran merger

By Lisa Kerner

Charlotte, N.C., April 26 - Midwest Air Group, Inc. investor Richard Hurowitz, chief executive of Octavian Master Fund LP, said he is disappointed by the board of directors' decision to reject the latest offer from AirTran.

In a letter to Midwest chief executive officer Timothy E. Hoeksema, Hurowitz said "We continue to believe that a strategic combination of Midwest and AirTran is extremely compelling and that, in light of AirTran's materially increased offer, both sides should now come together for good faith negotiations. We believe that most shareholders share our view and once again urge you and your board to immediately enter into constructive talks with AirTran."

Hurowitz also takes issues with the company's current legal framework and structure, providing a "virtual checklist of criteria considered undesirable by most experts in the field:

• A poison pill;

• A staggered board;

• An anti-takeover provision;

• Supermajority requirements to amend key provisions of the corporation's governing documents;

• A golden parachute;

• Lack of separation of the role of chairman and chief executive officer."

In addition, Hurowitz called for what he described as an honest and open debate about AirTran's proposal from AirTran.

"We call upon the board of Midwest to immediately remove the company's poison pill and other defenses and allow the future of the company to be put to a vote amongst its owners, the shareholders," the letter stated.

"We also put the company on notice that any further aggressive defensive measures on the part of Midwest, such as expanding the size of the board, would not be taken lightly by shareholders and would be viewed as an act of entrenchment."

Octavian and the reporting persons beneficially own 1,460,000 shares, or 5.97% of the company's outstanding shares, according to a schedule 13D filing with the Securities and Exchange Commission.

The investor, in a previous SEC filing, said a combination of the AirTran and Midwest "makes enormous strategic sense, may bring material synergies, and would significantly de-risk the enterprise for its shareholders."

Midwest is a Milwaukee-based provider of jet service to primarily business travelers.

AirTran is the parent company of AirTran Airways, a low-fare airline based in Orlando, Fla.

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