Life after debt for MyTravel

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.