Baffle for T.W.A.

All the news about T.W.A. seemed bad last week. The TWA Constellation Star of Cairo cracked up in Eire, killing twelve (see NATIONAL AFFAIRS). And the partnership between thin, erratic Howard Hughes, who controls T.W.A., and roly-poly, even-tempered Jack Frye, who runs it, cracked up. But the second crack-up might prove to be good news for T.W.A.

Frye and Hughes collided head-on over finances. T.W.A., its till drained by overseas expansion and a 25-day pilot strike, needed cash in a hurry, up to $100 million (TIME, Dec. 9). To get part of it, President Frye consequently proposed that T.W.A. issue another two million shares of stock.

Hughes, who owns 46% of the 985,929 shares already outstanding, objected. T.W.A. stock had already dropped from $71 to $21, and a new issue would probably send it down further. Above all, in creasing the number of shares would reduce the percentage of shares that Hughes owned.

Warming Up. But Jack Frye won over T.W.A.'s directors. They called a special stockholders' meeting for last week. Wall Street gossiped that Hughes tried to buy up the entire issue himself at bargain rates, thus cheaply increase his control to around 80%. When the stockholders' meeting was held, Hughes stayed away. Lacking a quorum, other stockholders adjourned. Hughes then demanded that six of the eleven directors resign, let him send in a new team, including a financial vice president. Told off again, he stayed away for the second meeting, too.

But this time it looked as if Howard Hughes might have pulled one monkey-shine too many. A lot of people in & out of T.W.A. were getting fed up. One was CAB Chairman James M. Landis. Others were officials of RFC, who had practically promised early this year to lend T.W.A. $60,000,000. But RFC was smarter than it had been when it sank $19 1/2 million into Hughes's 750-passenger "Hercules." With the "Hercules" some two years be hind schedule, RFC's faith in Hughes was dwindling.

Bearing Down. This time it wanted some protection. RFC Boss George Allen thought the best protection was to have Hughes put his stock in a voting trust, keep his fingers out of T.W.A.'s affairs.

But Hughes, having already borrowed $40 million from the Equitable Life As surance Society, turned this idea down. Now, with private capital cool to shaky T.W.A., it looked as if RFC was the best hope.

But before RFC invested, it intended to shove Hughes clear out of the T.W.A. cockpit. The shoving would probably be done by CAB, which had given Hughes special permission to buy control of T.W.A. in the first place. Last week CAB admitted that it was "reviewing" the per mission. This sounded as if CAB were going to give Hughes a choice of putting the stock in a trust, or selling it outright.

Once Hughes was out of T.W.A., the RFC money would come in. To forestall his ouster, Hughes was rumored to be pleading with Equitable Life for another whopping loan. But unless he got it, his chances of holding onto control of T.W.A. looked mighty slim.

This file is automatically generated by a robot program, so reader's discretion is required.