Facebook Twitter

GREYHOUND’S CREDITORS VOTE TO SUPPORT REORGANIZATION PLAN

SHARE GREYHOUND’S CREDITORS VOTE TO SUPPORT REORGANIZATION PLAN

Greyhound Lines Inc. is near the end of the bankruptcy road.

More than 80 percent of the company's creditors voted to support its Chapter 11 reorganization plan, chief executive Frank Schmieder said Monday.The vote, completed last Tuesday, and the $600 million reorganization plan itself still face approval by U.S. Bankruptcy Judge Richard Schmidt of Corpus Christi, who has scheduled a hearing Aug. 27.

Schmieder met with creditors in New York Monday to map a strategy for Greyhound to emerge from bankruptcy. Under the plan, Greyhound would become a publicly traded company largely owned by creditors.

The Amalgamated Transit Union, which represents Greyhound's striking drivers, and the National Labor Relations Board objected to the reorganization, Schmieder said.

The union is involved with an investor group that may present a purchase offer for Greyhound at the Aug. 27 hearing.

But Schmieder said the investor group, which includes former Greyhound chairman James Kerrigan and Richmont Corp., have not asked for the company's books.

"We're in concert with the creditors. If someone were to make a viable offer, they'd have to consider it," he said in a telephone interview. "But no one has asked us for information."

He expressed confidence Schmidt would confirm the Greyhound plan. "We're looking forward to getting back to the land of the living," Schmieder said.

The company has operated under protection from creditors since June 1990, three months after its more than 5,000 drivers went on strike. Greyhound blamed the Chapter 11 filing on costs it incurred because of the strike.

The company's reorganization places back-pay claims of striking drivers near the bottom of those against the company.

The union and the NLRB have asked a Milwaukee administrative law judge to rule Greyhound illegally forced the strike by declaring an impasse in contract talks.

The judge, who heard from the union and NLRB earlier this summer, will take testimony from Greyhound Sept. 10, when the proceeding resumes.

The union and NLRB contend striking drivers are owed back pay of more than $120 million. But Schmidt, who is overseeing the bankruptcy, discounted the back-pay claim to $31.5 million.

The union and the company met in Washington Tuesday for the first time since May to try to settle the strike. The last meeting broke up when the sides could not agree what order striking drivers would be recalled to work.

The company finished the second quarter with its second profit since the drivers' strike began, spokeswoman Liz Dunn said.

Greyhound earned $369,000 on revenue of $182 million during the period. For the first half of the year, the company lost $16.5 million on revenue of $347.3 million.

Bankruptcy-related costs to the company were $9.86 million during the six months.

Greyhound's load factor, the average number of people on one of its trips, was 28.8 in June, three passengers higher than in the same month two years ago. The load factor fell back to 27.3 in July, which was still above the 1989 level, Schmieder said.

He became chief executive officer of Greyhound July 2 after Fred Currey's sudden departure in May. Currey took Greyhound private when he bought the company in 1987.

Schmieder joined Greyhound as executive vice president for finance and operations control in May 1989. He became president and chief operating officer in December 1989 and led the introduction of computer models to chart the efficiency of Greyhound's routes.

He said the company will use that computer base to put a reservations system in place by next summer.

"That's going to give us better utilization of equipment and a much better level of customer service," he said.