FYI - Posted on e-TID today
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]Lenders wrest high price from MyTravel for latest debt revision
MyTravel will be allowed to use the proceeds from disposals as working capital after its lenders agreed to revise the Jun03 agreement in exchange for a potentially hefty ‘consent’ fee.
The June deal had insisted that any cash be used to reduce debt.
The fee will increase on a sliding scale until May 2006, the date when MyTravel’s £1.3bn debt is due to be refinanced. The amount payable will be up to 13.5% of the increase in its market capitalization above a £50m base level, with MyTravel able to reduce the percentage payable by refinancing the current arrangement earlier than May 06.
Coverage in today’s FT points out that if MyTravel’s market cap reaches £1bn – around half its peak - the banks would end up with £128m if MyTravel allowed the percentage to reach its upper limit.
A similar arrangement was included in the June deal when the lenders negotiated another consent fee, this time in exchange for agreeing to the refinancing in the first place. The June arrangement is also based on a percentage of the increase in MyTravel’s market cap of up to 15%, although this fee starts at a base level of £40m.
However, a limit of £65m was put on the lenders’ first fee – the consent agreed yesterday has no upper limit.
And also, more positively perhaps on
UK-Wire Financial News
MyTravel sells German and Polish businesses
MyTravel Group plc announces the disposal of its loss-making business in Germany and its smaller business in Poland.
In Germany, the Group sold Frosch Touristik GmbH (FTi) to RM3366, a privately-owned German company. FTi also operates in Austria and Switzerland. In the year to 30 September 2002, this business made an operating loss before goodwill and exceptional operating losses of £31.2 million on sales of £422.6
million and losses have continued in 2002/03. In view of its record and the difficult trading environment, FTi was not considered likely to make a positive contribution to the Group's turnaround. At 30 September 2002, FTi had net liabilities of £30.0 million, funded primarily by loans from the Group. Since that date FTi has been recapitalised by MyTravel (including through capitalising the intragroup loans) and it has been sold for a nominal consideration.
In Poland, the Group sold its two tour operators, Ving Sp z o.o. and Itaka Sp z.o.o., to a consortium including members of its management team. There was no material cash consideration for the sale.
The disposals will result in an exceptional loss in the year to 30 September 2003 of £86 million.
In addition, the Civil Aviation Authority has confirmed that it will be renewing the Group's Air Travel Organisers' Licences (ATOLs) with effect from 1 October 2003.