GPA board's future in doubt: Ryan to quit as chief executive after dollars 1.35bn rescue of aircraft leasing group

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The Independent Online
TONY RYAN and the star-studded board that presided over the near-collapse of GPA are expected to be relegated to a back-seat role following the dollars 1.35bn rescue of the Irish aircraft leasing group by the giant US corporation General Electric.

As a first move Mr Ryan, GPA's founder and chairman, will relinquish his role as chief executive - a job that could go to the GPA board's newest recruit, Patrick Blaney.

But as GE strengthens its control over the business, question marks are expected to arise over his long-term position and that of the GPA board, which includes Lord Lawson, the former Chancellor, Sir John Harvey- Jones, the former chairman of ICI, and Garret Fitzgerald, the former Irish Prime Minister, among its non- executive directors.

Under the deal, hammered out in New York on Wednesday night, GE's finance arm, GE Capital Corporation, is to inject dollars 1.35bn into GPA in return for 45 aircraft and the option to buy a controlling stake of between 65 and 80 per cent in the embattled group. The cash would be split, with 40 per cent used to buy existing GPA aircraft and the rest for new planes to be delivered over the next year.

The management of GPA's 460- strong aircraft fleet may also be transferred to a new company that will become a subsidiary of GE Capital. This would leave GPA as little more than a financial shell company liaising with the GE subsidiary. GE will not assume liability for any of GPA's dollars 5.5bn in debts.

GPA refused to disclose the exercise price at which GE is entitled to buy its controlling stake. But it is believed to be about dollars 2 a share.

In addition to the dollars 1.35bn from GE Capital, GPA is seeking a short-term bridging loan from its banks of dollars 100m and a longer-term loan from its existing shareholders of dollars 150m, which would be convertible into equity.

The approval of GPA's shareholders for the restructuring is to be sought before the end of this month. Maurice Foley, deputy chairman, said that, provided this was obtained and the refinancing of GPA's dollars 3.5bn in bank debt was agreed, GPA would have enough liquidity to meet commitments over the next 18 months.

'Nobody will take a hit,' he said. 'The purpose of the transaction is to avoid any need to restructure the unsecured debt held by bondholders.'

GPA was already expecting to lose a number of board members this year. Mr Foley and Geoffrey Knight, a non-executive, were retiring anyway while another non-executive, Peter Sutherland, the former EC Commissioner, will resign when he takes up the job as director-general of Gatt.

But Mr Foley rejected suggestions that GPA's executive directors, including Mr Ryan, would be under pressure to resign or retire. He said a programme of financial incentives would be put in place to reward all of the GPA management as the agreement with GE developed.

GE is entitled to take over GPA by buying new shares before 31 March 1997. If it proceeds, the dilution of existing shareholders' equity will be savage - a point not lost on GPA directors, who say that those investors would have done a lot better to have backed the group's initial plans for a dollars 200m rights issue. GPA is valued at less than dollars 400m now compared with the dollars 3.6bn capitalisation it would have had if last year's public flotation had not flopped.