DAT/Virgin Express merger in doubt.
Article in The Times today.
TUESDAY JANUARY 15 2002
Airline merger plan in doubt
BY NIC HOPKINS
PLANS to merge Virgin Express, Sir Richard Branson’s Brussels-based airline, with a unit of Sabena, Belgium’s bankrupt national carrier, were teetering on the brink of collapse last night after a group of creditors said they would reject a crucial part of the rescue plan.
Under the merger talks, Sir Richard is proposing to merge Virgin Express with Delta Air Transport (DAT), a Sabena subsidiary responsible for the airline’s still profitable regional operations. However, DAT owes €100 million (£60 million)to another subsidiary of the airline, Sabena Interservices Centre (SIC). The merger talks are contingent on creditors of SIC agreeing to write off half that debt and convert the rest into equity in the newly formed company. The creditors have until 12pm today to approve the plan.
A spokesman for a consortium of Belgian investors backing the rescue, said the signs were not encouraging. “We’re very worried that it will not go ahead. The mood among the creditors is very negative; there is much disagreement among them.”
If the bailout fails, DAT will face mounting pressure to repay the €100 million loan. If it is unable to come up with the money, Sabena’s administrators would likely take control of the regional airline.
“The merger talks will end if we can’t reach an agreement with the creditors. It will be a domino effect. Without DAT there is no reason to pursue an arrangement with Virgin,” the spokesman said.
Virgin Express refused to concede that failure by DAT’s backers would end the merger talks. “There are several possibilities, and I’m not going to say what they are. We will see what happens tomorrow,” said Yves Panneels, a spokesman for the airline.
Anyone know what happened at 12pm?