 | |
MYTRAVEL has turned to the High Court in its battle to
persuade bondholders to agree to its debt-for-equity
swap.
As Travel Weekly went to press the majority of the
company’s bondholders had failed to vote in favour of the
restructuring proposal.
MyTravel Group chairman Michael Beckett said: “I am disappointed
that so far the bondholders have not supported our consensual
restructuring proposal, which I believe is more than fair to
them.”
The holders of MyTravel’s £216 million convertible
bonds, due in 2007, failed to agree to a proposed £800 million
debt-for-equity swap which would leave them with an 8% share of the
company.
Senior managers would receive share options of up to 5.6% as
part of an incentive plan.
Bondholders were warned in a memo earlier this week that their
share would reduce to 4% if they failed to respond by the November
17 deadline.
In an effort to up the stakes, MyTravel also warned bondholders
the Civil Aviation Authority is “likely” to revoke its licences
unless a restructuring deal is in place by the end of
the year.
“If the company is not able to restructure its balance sheet in
a timetable acceptable to the CAA, it is inevitable it will cease
trading and enter into insolvency proceedings,” it said.
A court hearing was scheduled yesterday on how to proceed
without bondholders’ approval.
CAA deputy director of consumer protection David Moesli refused
to comment on whether it had agreed a statement with MyTravel, but
said it was holding ongoing talks with the company.
“All operators know the CAA has certain requirements and
MyTravel has clarified some of these for its investors,” Moesli
added.
One analyst said: “If the bondholders have any sense they will
agree to this, but they should do it kicking and screaming. What
choice do they have?”
MyTravel said it would still make a loss for the 12 months to
September 30, but performance was significantly better than the
previous year.