Icahn Says He May Cancel Bid for TWA : Eastern Air Weighs Offer; Employees Seek Buy-Out Talks

NEW YORK —  Financier Carl C. Icahn, who has been waging a battle to take over Trans World Airlines, warned Thursday that he might withdraw his offer of $18 per share for the 73.8% of the company that he and investor groups led by him do not already control.

Icahn also reported to the Securities and Exchange Commission that he and his allies had increased their stake to 26.2% from 25%, buying 758,400 shares for $13.7 million. TWA’s shares closed at $18.625, down 25 cents, with a total of 2.45 million shares changing hands--746,500 of that in six large block trades at $18.50 a share.

TWA, which has been fighting Icahn in the courts and with petitions to the Department of Transportation, said earlier this week that it was seeking a friendly buyer to outbid Icahn. It said that it sought bids for more than $18 a share. But it also said that, if it did not receive a better offer than Icahn’s within 60 days, it will let shareholders vote on his proposal.

Also Willing to Sell Stake

“What they are expecting is an absurdity,” Icahn complained in a telephone interview. “They are saying ‘You stand there with an $18 bid and in 60 days you be the backstop.’ They are saying that ‘If in 60 days nobody else wants the company, we’ll take your $18.’ . . . I made them a bid now. I am not guaranteeing that I will be around with that bid in 60 days.”

Icahn also indicated that he would be willing to sell out to a higher bidder.

“I say let’s set up a procedure where everybody has the same right to make a bid, and then I will honor the best bid,” he said. “If there is a better bid than mine and I don’t top it, then I will say ‘I won’t vote against it. I’ll accept it.’ ”

A spokesman for TWA, told of Icahn’s comments, said “the situation is too delicate” to comment on.

Eastern Airlines spokesman Richard McGraw said a number of that airline’s officials are in New York going over TWA records to assess whether Eastern should make a bid for TWA.

“It will be a few days before we assess whether or not we’re interested,” McGraw said.

Capt. Harry Hoglander, a TWA pilot and chairman of the airline’s council of the Airline Pilots Assn., said his branch of the union had sought to discuss an employee leveraged buy-out of the airline with management. He said he spoke with a TWA executive a week ago but had received no answer. He declined to state how much the union was willing to invest in the airline. “The way these things work,” he said, “is that banks loan money to employees if they offer concessions to the company.”

In a taped telephone message to the airline’s employees, Jerry Cosley, a vice president for public relations, said a leveraged buy-out by employees would be one alternative. But he also warned that “the financial participation required in such a venture would be significant.”