- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-1/A
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 2)
-----------------------
ASA HOLDINGS, INC.
(Name of Issuer)
DELTA AIR LINES, INC.
DELTA AIR LINES HOLDINGS, INC.
DELTA SUB, INC.
(Bidders)
-----------------------
Common Stock, $0.10 Par Value
(Title of Class of Securities)
-----------------------
04338Q 10 7
(CUSIP Number of Class of Securities)
-----------------------
Robert S. Harkey, Esquire
Senior Vice President - General Counsel
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
Atlanta, GA 30320
(404) 715-2387
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Bidders)
-----------------------
With Copies to:
Joseph Rinaldi
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
(212) 450-4000
-----------------------
February 22, 1999
(Date Tender Offer First Published, Sent or Given to Security Holder)
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<PAGE>
This Amendment No.2 amends and supplements the Tender Offer Statement on
Schedule 14D-1 filed on February 22, 1999, as amended and supplemented on March
3, 1999 (the "Schedule 14D-1"), by (i) Delta Air Lines, Inc., a Delaware
corporation ("Delta"), (ii) Delta Sub, Inc., a Georgia corporation and an
indirect, wholly owned subsidiary of Delta ("Delta Sub") and (iii) Delta Air
Lines Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of
Delta, relating to the offer by Delta Sub to purchase all of the issued and
outstanding shares (the "Shares") of common stock, $0.10 par value per share, of
ASA Holdings, Inc., a Georgia corporation ("ASA"), at a price of $34.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated February 22, 1999 and in the related
Letter of Transmittal, copies of which are attached as Exhibits (a)(1) and
(a)(2) to the Schedule 14D-1 (which are herein collectively referred to as the
"Offer").
Capitalized terms not separately defined herein shall have the meanings
specified in the Schedule 14D-1.
Item 10. Additional Information
Item 10(e) is hereby amended to read in its entirety as follows:
(e) On February 25, 1999, Mala Nebenzahl and Alex Pappas, on behalf of
themselves and other ASA shareholders, filed a purported class action complaint
in the Superior Court of Fulton County in the state of Georgia against ASA's
directors, ASA (collectively, the "ASA Defendants") and Delta. The complaint
seeks (i) to enjoin the Offer and the Merger or to rescind these transactions if
either is consummated, (ii) unspecified compensatory and rescissory damages and
(iii) costs and disbursements of the action. The complaint alleges, among other
things, that (i) the ASA Defendants violated their fiduciary duties to ASA
shareholders by entering into the Merger Agreement and recommending the Offer
and the Merger and (ii) Delta is a controlling shareholder of ASA, has violated
its fiduciary duties to ASA shareholders because it "wrongfully used its
superior position and control to bring to bear pressure on the [ASA Board]" and
caused the ASA Defendants to accept an inadequate price for the Shares. Delta
and ASA believe that the complaint is without merit and intend to vigorously
defend this action. The above description of the complaint is qualified in its
entirety by reference to the complete complaint, a copy of which is attached
hereto as Exhibit (g) and is incorporated herein by reference.
Item 11. Material to Be Filed as Exhibits
Item 11 is hereby supplemented and amended as follows:
(g) Complaint filed on February 25, 1999 in the Superior Court of Fulton
County, State of Georgia in an action titled Mala Nebenzahl and Alex
Pappas v. John W. Beiser et al.
<PAGE>
After due inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
March 5, 1999 DELTA AIR LINES, INC.
By: /s/ Maurice W. Worth
----------------------------------
Name: Maurice W. Worth
Title: Chief Operating Officer
DELTA AIR LINES HOLDINGS, INC.
By: /s/ Leslie P. Klemperer
----------------------------------
Name: Leslie P. Klemperer
Title: Vice President and Secretary
DELTA SUB, INC.
By: /s/ Dean C. Arvidson
-----------------------------------
Name: Dean C. Arvidson
Title: Secretary
<PAGE>
EXHIBIT INDEX
Exhibit No.
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(g) Complaint filed on February 25, 1999 in the Superior Court
of Fulton County, State of Georgia in an action titled Mala
Nebenzahl and Alex Pappas v. John W. Beiser et al.
<PAGE>
EXHIBIT (g)
IN THE SUPERIOR COURT OF FULTON COUNTY
STATE OF GEORGIA
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MALA NEBENZAHL and ALEX PAPPAS, on :
behalf of themselves and all others similarly :
situated, : Civ. No. 1999CV05541
:
Plaintiffs, : CLASS ACTION
: ------------
: COMPLAINT
: ---------
- against - :
:
JOHN W. BEISER, GEORGE BERRY, JEAN :
A. MORI, PARKER H. PETIT, GEORGE F. :
PICKETT, ALAN M. VOORHEES, RALPH W. :
VOORHEES, ASA HOLDINGS, INC. and :
DELTA AIR LINES CORPORATION, :
:
Defendants. :
- -----------------------------------------------x
Plaintiffs, by and through their attorneys, allege the following upon
information and belief, except as to paragraph 1, which is alleged upon personal
knowledge:
Nature Of The Action
--------------------
1. This is a stockholder's class action on behalf of the public
stockholders of ASA Holdings, Inc., ("ASA" or the Company), parent company of
Atlantic Southeast Airlines ("Atlantic"), against its directors and the
controlling shareholder of ASA in connection with the proposed acquisition of
the publicly owned shares of ASA common stock by its controlling shareholder,
defendant Delta Airlines Corporation ("Delta"), which Delta does not already
own. The action arises out of a tender offer (the "Offer" or "prepare
transaction") by a wholly-owned subsidiary of Delta to purchase all of the
outstanding shares not owned by Delta. The offer is being made at a price of
$34.00 per share. Following the communication of the Offer, Delta intends to
merge the remaining untendered shares into Delta, pursuant to the merger
agreement between Delta and the Company ("Merger Agreement"). Immediately prior
to the Offer, Delta beneficially owned approximately 28% of the outstanding
shares of ASA. Delta, by way of the Offer seeks beneficial ownership of at least
a majority (together with shares which Delta already owns) of ASA's outstanding
shares.
2. The Directors of ASA, as set forth below, by agreeing to recommend
acceptance of the Offer and by negotiating and accepting the Offer, are in
breach of their fiduciary duties to ASA's shareholders, in that they have not
taken all steps necessary to obtain a fair and adequate price for ASA's shares
(including an auction) and by improperly bending to the wrongful and undue
pressure brought to bear by Delta. The subsequent adoption of the Merger
Agreement is subject to, among other things, the affirmative vote of the
<PAGE>
shareholders of the Company holding a majority of the outstanding shares. Given
that Delta already owns approximately 28%, and the Individual Directors (all of
whom have agreed to tender their shares) own an additional approximate 6%, Delta
needs only an additional 17% of ASA outstanding shares to be tendered in order
to ram through the Merger.
3. At a meeting of the Board of Directors on February 15, 1999, the
Board of Directors unanimously approved the Merger Agreement and the
transactions contemplated thereby and determined that the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger, are
fair to and in the best interests of the Company's shareholders (other than
Delta and its affiliates). The Company's Board of Directors recommends that the
Company's shareholders accept the offer, tender their shares pursuant to the
offer and approve and adopt the Merger Agreement.
4. The consideration that Delta has offered to members of the class
(as defined below) in the proposed transaction is unfair and inadequate because,
among other things, the intrinsic value of ASA's common stock is materially in
excess of the amount offered, giving due consideration to, among other things,
the Company's growth and anticipated operating results, net asset value and
profitability, the meager premium over the Company's shares' market price
immediately prior to the announcement of the Offer and the wrongful and undue
pressure brought to bear on the Company's Board of Directors by Delta.
The Parties
-----------
5. Plaintiffs are and have been at all relevant times owners of shares
of the common stock of ASA.
6. (a) ASA is a Georgia corporation with its principal executive
offices at 100 Hartsfield Centre Parkway, Suite 800, Atlanta, Georgia 30354. ASA
operates Atlantic, Atlanta's largest regional air carrier with service to 37
markets and offers service to 21 airports from its second hub at
Dallas/Ft-Worth, Texas. It has a fleet of 88 aircraft and 2,673 employees based
in 40 cities across its route system. Since 1984, ASA has operated a "Delta
Connection" carrier. As a Delta Connection carrier, ASA, through a code share
agreement, flies customers primarily from cities in the southeastern United
States and in Texas to connect with Delta's global network of flight at the
airline's hubs in Atlanta and Dallas/Ft. Worth.
(b) Under the Delta Connection program, all of the Company's flights
are promoted as part of the Delta route network in computer systems used by
travel agents and in advertising and published timetables, and all Company
flights carry the Delta designator code. Company flights are sold on Delta
ticket stock, and all revenue from Company ticket sales by travel agents are
remitted to Delta. Delta handles the Company's reservations calls. Customer
payments for tickets purchased from agents or at Delta city ticket offices for
the Company's flights are remitted to Delta. The Company and Delta split
revenues (less cost of sales) in accordance with an agreed-upon revenue
proration arrangement. Under this arrangement, the Company is paid all revenue
(less agreed expenses) for tickets sold to passengers not connecting to a
Delta-operated flight (i.e. local traffic). Revenue for passengers traveling on
a ticket with a Company flight connecting to a Delta-operated flight are
prorated between Delta and the Company.
(c) As of March 30, 1998, ASA had 29,822,877 shares of common stock
outstanding, held by hundreds of shareholders of record. ASA's common stock is
listed and traded on NASDAQ.
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<PAGE>
7. (a) Defendant Delta is a Delaware corporation with its principal
executive offices located at Hartsfield Atlanta International Airport, 1030
Delta Boulevard, Atlanta, Georgia 30320.
(b) Immediately prior to the Offer, Delta was the owner of 7,995,000
shares of ASA common stock, or approximately 28% of the outstanding shares.
Pursuant to agreement, Delta has the right to designate two members of ASA's
Board of Directors but has not done so since March 27, 1997. In addition, Delta
has numerous interlocking business arrangements with ASA and/or Atlantic and
controls and dominates ASA's affairs. Furthermore, Delta's ability to replace
Atlantic with another connection carrier gave Delta a virtual stranglehold over
the business earnings and public stock price of ASA's outstanding shares. Delta,
therefore, is a controlling shareholder and owes fiduciary obligations of good
faith, candor, loyalty and fair dealing to the public shareholders of ASA.
8. (a) Defendants Beiser, Berry, Mori, Petit, Pickett, Alan M.
Voorhees, and Ralph W. Voorhees constitute the Board of Directors of ASA
(collectively, the "Individual Defendants").
(b) In addition, at all relevant times, defendant Pickett served as
Chief Executive Officer and Chairman of the Board of the Company and President
and Chief Executive Officer of ASA and Atlantic.
(c) Defendant Pickett owns approximately 2.8% of ASA's outstanding
common stock; defendant Beiser owns approximately 1. 7% of ASA's common stock;
and all the Individual Defendants collectively own approximately 6% of ASA's
common stock.
(d) Defendants Ralph W. Voorhees and Alan M. Voorhees are brothers.
Defendant Beiser is the brother-in-law of Ralph W. Voorhees.
9. Each Individual Defendant and ASA owed and owes ASA and its public
stockholders fiduciary obligations and were and are required: to use their
ability to control and manage ASA in a fair, just and equitable manner, to act
in furtherance of the best interests of ASA and its public stockholders,
including, but not limited to, obtaining a fair and adequate price for ASA's
shares; to refrain from abusing their positions of control; and not to favor
their own interests at the expense of ASA public stockholders.
CLASS ACTION ALLEGATIONS
10. Plaintiffs bring this action on behalf of themselves and as a
class action, pursuant to O.C.G.A. Section 9-11-23, on behalf of all public
stockholders of ASA, and their successors in interest, who are or will be
threatened with injury arising from defendants' actions as more fully described
herein (the "Class"). Excluded from the Class are defendants herein and any
person, firm, trust, corporation, or other entity related to or affiliated with
any of the defendants.
11. This action is properly maintainable as a class action because:
(a) The Class is so numerous that joinder of all members is
impracticable. There are approximately 29 million shares of ASA common stock
outstanding, held by hundreds, if not thousands, of record and beneficial
stockholders.
(b) There are questions of law and fact that are common to the Class
and that predominate over questions affecting any individual Class member. The
common questions include, inter alia, the following:
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<PAGE>
(i) Whether defendants have engaged in and are continuing to engage in
conduct that unfairly benefits Delta at the expense of the members of the
Class; (ii) Whether the Individual Defendants, as officers and/or directors
of the Company, are violating their fiduciary duties to plaintiffs and the
other members of the Class; (iii) Whether plaintiffs and the other members
of the Class would be irreparably damaged were defendants not enjoined from
the conduct described herein; (iv) Whether defendants have initiated and
timed their buy-out of ASA public shares at a point when ASA has made
significant progress in correcting certain problems, in order to unfairly
benefit Delta at the expense of ASA's public shareholders; and (v) whether
the Individual Defendants have breached and are in breach of their
fiduciary duties of full faith and candor to ASA's shareholders.
(c) Plaintiffs' claims are typical of the claims of the other members
of the Class in that all members of the Class will be damaged alike from
defendants' actions.
(d) Plaintiffs are committed to the prosecution of this action and
have retained competent counsel experienced in litigation of this nature.
Accordingly, plaintiffs are adequate representatives of the Class and will
fairly and adequately protect the interests of the Class.
Substantive Allegations
12. According to the Form 14D-9 filed on or about February 22, 1999 by
the Company:
In late 1997, Delta raised with the Company certain concerns about
various customer service issues. These customer service issues were,
in part, attributable to significant attrition among the Company's
mechanics and the difficulties associated with negotiating a new
collective bargaining agreement with the Company's pilots union.
Discussions were held throughout the spring of 1998 between the
Company and Delta regarding various customer service issues. On July
21,1998, Maurice W. Worth, Chief Operating Officer of Delta, met with
Mr. Beiser to discuss Delta's concerns about the Company's service.
Mr. Worth informed Mr. Beiser that if service did not improve
significantly within the next 45 days, Delta would need to reevaluate
its alternatives for Delta connection service on certain routes. On
July 27, 1998, Mr. Worth and Leo F. Mullin, President and Chief
Executive Officer of Delta, met with Mr. Beiser and George F. Pickett,
Chairman and Chief Executive Officer of the Company, to continue
discussions regarding the need for improvements in the Company's
service. On September 8,1998, Mr. Worth wrote to Mr. Beiser
acknowledging the Company's significant addressing its service
problems and noting that Delta looked forward to continued improvement
by the Company.
In July and September 1998, the Company's management indicated to
Delta that they were: interested in expanding the Company's connecting
operations into several new markets. Although Delta noted that the
Company had been making progress in improving customer service levels,
Delta nonetheless rejected expansion into these new markets in large
part. on the basis of its continued concerns over the Company's
service. During regular meetings between Delta and the Company's
representatives over the course of the fourth quarter of 1998, Delta
noted the Company's progress in addressing certain service issues, but
also continued to express concern about a number of other service
issues.
On January 18, 1999, Mr. LaBrecque wrote to Mr. Beiser, reiterating
Delta's concerns about the Company's customer service and the
4
<PAGE>
appropriate sharing of costs between the two carriers, as well as
certain other issues. On January 20, (less than a month prior to
entering into the definitive agreement in connection with the offer]
1999, Mr. Worth met with Messrs. Beiser and Pickett to discuss the
subjects covered in Mr. LaBrecque's January 18 letter. At that
meeting, Mr. Worth repeated Delta's concerns about the Company's
customer service. He said that, as a result, Delta was considering
providing another Delta Connection carrier with code sharing
opportunities on certain Atlanta routes. He also stated that Delta
considered the existing revenue allocation arrangement between Delta
and the Company to be inequitable to Delta, and believed that it
needed revisiting. Messrs. Pickett and Beiser acknowledged that the
Company had experienced service problems in the first half of 1998,
but reminded Mr. Worth of the significant progress that the Company
had made since agreeing to a new collective agreement with its pilot's
union in July 1998. Mr. Worth acknowledged this, but noted that there
were still significant ongoing service concerns that needed to be
addressed. The parties agreed to meet in the near future to further
discuss these matters and to establish a more specific agenda for
renegotiating the companies' commercial arrangements.
On January 25, 1999, Mr. Beiser called Mr. Worth to ask whether Delta
was still considering bringing another Delta Connection carrier into
the Atlanta market. Mr, Worth replied that no decision had yet been
made on that issue. Later that day, the Company delivered to Delta Mr.
Beiser's written response to Mr. LaBrecque's January 18 letter. In his
response, Mr. Beiser clarified the Company's position with respect to
the concerns identified by Mr. LaBrecque, in particular by stressing
the significant improvements in service achieved by the Company in the
second half of 1998. Mr. Beiser reiterated the Company's desire to
meet with Delta to work out satisfactory solutions to all issues.
* * *
On February 11, 1999, Goldman, Sachs [Delta's financial advisor] and
Morgan Stanley [ASA'S financial advisor] had a discussion in which
Morgan Stanley indicated that it thought that premiums historically
received in the sale of public companies were a relevant consideration
in any valuation of an acquisition transaction. Goldman, Sachs
responded that Delta was still considering the feasibility of an
acquisition and that it was premature to discuss Delta's estimate of
value ranges. Goldman, Sachs did, however, indicate that the
then-current market price of the Shares was not an appropriate measure
of the future value of the Company, taking into account the fact that
the marketing arrangements between Delta and the Company were being
renegotiated. Goldman, Sachs confirmed its understanding that, in the
discussions between Delta and the Company, Delta had told the Company
that in the past, in light of Delta's concerns over the Company's
service. Delta had considered the possibility of having other regional
carriers provide connecting service at Delta's Atlanta hub. Goldman,
Sachs also reiterated Delta's willingness to continue discussions to
determine whether a satisfactory agreement could be reached to modify
the companies' existing commercial arrangements. Later that
day, Goldman, Sachs indicated in a call with Morgan Stanley that if
the parties were to proceed with the acquisition alternative, Delta's
current valuation work suggested that any acquisition would have to be
somewhere in the general vicinity of the then-current market price of
the Shares.
5
<PAGE>
Also on February 11, 1999, Mr. Worth met with Messrs. Pickett and
Beiser to discuss the treatment of the Company's management and
employees if the acquisition alternative were to be pursued. Later
that day, representatives of Delta and the Company once again met to
continue their discussions concerning the renegotiation of their
existing marketing arrangements. The Company's representatives
asserted that Delta was using an incorrect methodology for evaluating
revenue allocation between the carriers. Delta stated that sampling
differences could lead to different conclusions. The Delta
representatives noted that, irrespective of the methodologies
employed. Delta had to consider the fact that it could enter into
arrangements with other carriers to serve the Atlanta market on a
basis more favorable to Delta than the current arrangements with the
Company. The Delta representatives, further observed that, if the
Company were to remain competitive, the revenue allocation between the
Company and Delta would have to be modified. The Delta representatives
acknowledged that, as a result of such modification, the Company would
probably experience reduced revenues aggregating $40 million to $50
million per year.
* * *
At a meeting held on the afternoon of February 15, 1999, in Atlanta,
Georgia, the Board gave further consideration to the proposed
transaction. Among other things, management reported on the
substantial negative impact that the Delta proposals for renegotiating
the Company's marketing arrangement with Delta would have on the
future financial performance of the Company . . .
In reaching its conclusions with respect to the Offer and the Merger
Agreement, the Board considered a number of factors, including the
following: (1) The familiarity of the Board with the financial
condition, results of operations, business and prospects of the
Company (as reflected in the Company's historical and projected
financial information), current economic and market conditions
generally and in the airline industry specifically;
(2) That the Company's financial condition, results of operations.
business and prospects were substantially dependent on the Company's
relationship with Delta and the Company's role as a Delta Connection
carrier and that the Delta Connection Agreement was terminable by
Delta upon 30 days' notice;
(3) That Delta had advised the Company that it was dissatisfied with
the Company's performance and service levels;
(4) That based upon discussions between Delta and the Company's
management with respect to revenue reallocation and cost sharing
arrangements proposed by Delta as part of the negotiation for renewing
the Delta Connection Agreement with the Company would, in management's
view, be likely to reduce the Company's net income approximately $21
million in 1999 and approximately $45-$55 million in each year
thereafter from the net income of the Company preciously projected by
management, and that management did not believe it could negotiate
terms that would be materially more favorable to the Company;
(5) That Delta had opposed other changes to its commercial
relationship with the Company, the effect of which management could
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<PAGE>
not be readily quantify at the time but which management believed
would adversely affect further the future financial performance of the
Company, including Delta's proposals to impose upon the Company new
charges for the payment of overrides to travel agents' commissions, to
specify markets into which the Company's regional jets would be
deployed, and to impose fees for passengers not connecting with Delta
flights and service performance penalties;
(6) THAT THE $34.00 PER SHARE IN CASH TO BE PAID IN THE OFFER AND THE
MERGER WOULD REPRESENT A SIGNIFICANT PREMIUM TO THE PRICE AT WHICH THE
SHARES WOULD LIKELY TRADE ONCE THE ANTICIPATED RENEGOTIATED DELTA
CONNECTION AGREEMENT PROVISIONS BECAME EFFECTIVE AND PUBLICLY KNOWN;
(7) That the Company's relationship with Delta within the Southeastern
United States was not exclusive and that Delta could at any time bring
in other Delta Connection carriers into markets served by the Company;
(8) That Delta had reiterated recent proposals for the Company to
introduce service into new markets as a Delta Connection carrier,
using a Delta's designator code, which severely restricted the
Company's ability to expand its operations on a profitable basis....
(emphasis added).
13. The description of events leading up to the definitive agreement
makes it clear that Delta, ASA's largest shareholder, wrongfully used its
superior position and control to bring to bear pressure on the Company's Board
of Directors and that the Individual Directors, in breach of their fiduciary
duties, caved in to such pressure and caused the Company to enter into the
definitive agreement, to the detriment of the plaintiff and the class. Included
in that undue and wrongful pressure were Goldman, Sachs statements to Morgan
Stanley set forth above in Paragraph 12. Upon information and belief, Goldman
Sachs was either given said information by Delta and/or was requested by Delta
to pass on that information through statements to Morgan Stanley and part of
Delta's wrongful and concerted effort to unfairly pressure ASA and the
Individual Defendants into agreeing to enter into the adequate Offer and Merger
Agreement.
14. On or about February 16, 1999, ASA announced that it had signed a
definitive agreement with Delta whereby a newly formed, wholly-owned subsidiary
of Delta shortly will commence a tender offer to acquire all of the outstanding
shares of ASA that it does not already own at a price of 34.00 per share, for an
aggregate of about $700 million (the "tender offer"), or a premium over market
price of just 6%.
15. As recently as July 1998, the market price of ASA common stock was
$51 per share. The tender offer price amounts to just 12.8 times forecast
earnings. By comparison, Camair and Skywest, Delta's two other connection
carriers trade at 16.6 and 15.5 times earnings, respectively. The Proposed
Transaction represents an inadequate premium over the market price of ASA common
stock on February 12, 1999.
16. According to ASA, the completion of the tender offer depends,
among other things, upon the valid tendering of shares which, together with the
shares Delta already owns, represent at least a majority of the outstanding
shares on a fully diluted basis. When the tender offer is completed, Delta
intends to operate ASA as a wholly-owned subsidiary.
17. Defendant Pickett stated:
7
<PAGE>
ASA Holdings Board of Directors fully supports this agreement, which
serves the best interest of our shareholders. The Board has
recommended that its stockholders tender their shares pursuant to the
offer. This transaction is a good alternative for our shareholders
given all the facts and circumstances taken into consideration by the
Board. The likely results of these negotiations were taken into
consideration by the Board. The agreement also serves the best
interest of our customers, employees and the communities we serve. It
will enhance ASA's long-term growth potential by aligning ASA with
Delta's global network, operational and business skills and financial
strength.
18. According to Delta:
Its acquisition of ASA will enhance service for airline customers and
for communities served by ASA through closer integration of schedules
and improved operations. Furthermore, the acquisition will improve
Delta's financial performance.
Revenue gains are expected to come from more efficient operations,
market growth, better utilization of aircraft at both airlines, and improved
business functions. Delta expects the transaction to be accretive to earnings in
the first year of operations.
19. Any transaction to acquire the Company at the price being
considered does not represent the true value of the Company and is unfair and
inadequate. As recently as July 1998, the Company's shares traded at values far
exceeding the price offered in the Proposed Transaction.
20. The price that Delta has offered has been dictated by Delta to
serve its own interests and is being crammed down by Delta to force ASA's public
shareholders to relinquish their ASA shares at a grossly unfair price.
21. Delta, by reason of its approximate 28% ownership of ASA's
outstanding shares and its business arrangements with ASA (including its
connection carrier agreement) is in a position to ensure effectuation of the
transaction without regard to its fairness to ASA's public shareholders.
22. Because Delta is in possession of proprietary corporate
information concerning ASA's future financial prospects, the degree of knowledge
and economic power between Delta and the class members is unequal, making it
grossly and inherently unfair for Delta to obtain the remaining ASA shares at
the unfair and inadequate price that it has proposed.
23. By offering a grossly inadequate price for ASA's shares and by
using its control as a means to force the consummation of the transaction, Delta
is violating its duties as a controlling shareholder.
24. Any purported review of the transaction by a special committee of
"independent directors" would be a sham given Delta's domination and control of
the Company.
25. Any vote by ASA's shareholders would be a sham given Delta's
domination and control of the Company.
26. Any buy-out of ASA public shareholders by Delta on the terms
offered, will deny class members their right to share proportionately and
equitably in the true value of ASA's valuable and profitable business and
further growth in profits and earnings, at a time when the Company is poised to
8
<PAGE>
increase its profitability and has admittedly made great strides in addressing
and correcting certain problems.
27. Because Delta is a controlling shareholder of ASA, no auction or
market check can be effected to establish ASA's worth through arm's-length
bargaining. Thus, Delta has the power and is exercising its power to acquire
ASA's shares and dictate terms that are in Delta's best interest, without
competing bids and regardless of the wishes or best interests of the class
members or the intrinsic value of ASA's stock.
28. By reason of the foregoing, defendants have breached and will
continue to breach their duties to the public shareholders of ASA and are
engaging in improper, unfair dealing and wrongful and coercive conduct.
29. Plaintiffs and the Class will suffer irreparable harm unless
defendants are enjoined from breaching their fiduciary duties and from carrying
out the aforesaid plan and scheme.
30. Plaintiffs and the other class members are immediately threatened
by the acts and transactions complained of herein and lack an adequate remedy at
law.
WHEREFORE, plaintiffs demand judgment and preliminary and permanent
relief, including injunctive relief, in their favor and in favor of the Class
and against defendants as follows:
A. Declaring that this action is property maintainable as a class
action, and certifying plaintiffs as class representatives;
B. Enjoining the proposed transaction and, if the transaction is
consummated, rescinding the transaction;
C. Awarding plaintiffs and the Class compensatory damages and/or
rescissory damages;
D. Awarding plaintiffs the costs and disbursements of this action,
including a reasonable allowance for plaintiffs' attorneys' and experts' fees:
and
E. Granting such other, and further relief as this Court may deem to
be just and proper.
Dated: February 24, 1999
/s/ Christi C. Mobley
---------------------------------
Martin D. Chitwood
Georgia Bar No. 124950
Christi C. Mobley
Georgia Bar No. 107869
David A. Bain
Georgia Bar No. 032449
CHITWOOD & HARLEY
2900 Promenade 11
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
(404) 873-3900
LOCAL COUNSEL FOR PLAINTIFFS
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OF COUNSEL:
Joseph H. Weiss
WEISS & YOURMAN
551 Fifth Avenue
Suite 1600
New York, New York 10176
(212) 682-3025
Jules Brody
STULL STULL & BRODY
6 East 45th Street
New York, New York 10017
(212) 687-7230
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