National bankruptcy credit to be extended

Thursday, July 26, 2001 | 11:20 a.m.

A $16 million letter of credit that enables bankrupt National Airlines to continue to operate will be extended another month, a National spokesman said today.

Dik Shimizu of National said Harrah's Entertainment Inc., which has extended the letter of credit for two months while the Las Vegas-based airline seeks a buyer, has agreed to another extension to Aug. 31.

Under terms of an agreement reached last month between Harrah's and National, the airline, which has been operating under Chapter 11 bankruptcy protection since December, must be in negotiations for a sale by Tuesday for the letter of credit to be extended.

Shimizu said the newest extension is indicative of the progress National is making in finding a buyer.

But a spokesman for Harrah's said today that his company would wait until today's hearing in U.S. Bankruptcy Court before determining whether an extension would occur.

"We will wait to see if there's a bonafide deal in place to determine if terms of the original extension arrangement will apply," said Gary Thompson, a spokesman for Harrah's.

Attorneys representing creditors in the case said they are unaware of any purchase agreements pending and that it was unclear what would happen in today's hearing.

Several potential buyers, from billionaire financier Carl Icahn to one of National's aircraft lessors, International Lease Finance Corp., Los Angeles, have been in negotiations to buy or invest in the airline in the nine months since the bankruptcy filing.