UK leisure firm MyTravel has brokered a deal with rebel bondholders over a debt plan, allowing the company to pull back from bankruptcy and complete a rescue within the next two weeks, the company said yesterday.
MyTravel, formerly Airtours, has been battling with its bondholders over an £800 million debt reduction plan which the company has said it needs to implement by year-end to stay afloat.
In November bondholders rejected an offer of eight per cent equity in return for cancelling their £216 million of debt, in a debt for equity swap plan which the company's other creditors agreed last week.
But bondholders finally accepted the offer in a deal signed late Sunday night, with a week of court dates looming.
"It's a sensible deal for all parties and we're delighted," said a MyTravel spokeswoman. "We've got what we want."
The company will pay bondholders' legal costs and a missed bond payment from last August. The deal allows MyTravel to proceed with its plan to transfer its assets to a new company, MyTravel Holdings, and complete its turnaround within weeks.
"MyTravel Holdings will start trading on December 31 or very early in the new year," the spokeswoman said.
Yesterday's rescue plan formally needs the acceptance of shareholders and bondholders, but shareholders agreed to a similar deal last week, and bondholders are dominated by the committee which brokered the present deal.
MyTravel bondholders include Societe Generale, Lehman Brothers Holdings Inc. and funds Fidelity Investments and New Star, a source close to bondholders said.
In a string of increasingly bitter court battles, MyTravel won in November the right to exclude bondholders from a vote on the debt restructuring which they opposed, but bondholders then won the right to appeal this week against that exclusion.
Bondholders had argued that their exclusion compromised the rights of bondholders, saying that it threatened to cut the value of bonds generally.
"We've protected our rights and don't have to pay costs, and they've got their restructuring and their eight percent offer," a source close to bondholders told Reuters on Monday. "I think it's pretty sensible."
MyTravel - one of the UK's biggest travel companies - ran into difficulties in 2002 and 2003 following accounting problems and a downturn in the travel industry.
Last week it posted a loss before tax of £190 million in the 13 months to October 31, 2004.
In 2004 the British unit has dragged down operating profits in its North American divisions, but the company said it expected to make an operating profit across all its divisions by 2006.