GPA will face bondholders to head off administration

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The Independent Online
The embattled aircraft leasing group GPA will almost certainly be pushed into the hands of Irish administrators unless it can obtain the backing of its bondholders for a moratorium on debt repayments at a crucial meeting in New York next Thursday.

Last night the company's bankers granted it a further waiver on repayment of its dollars 3.6bn of bank debt but only until 17 May - the same day that a key medium-term loan note falls due for repayment.

By the third week of June GPA, which has secured and unsecured debts of dollars 5.5bn, has to find about dollars 200m to pay bondholders or get their agreement on a moratorium.

Next week's meeting in New York between the GPA chairman, Tony Ryan, his advisers from the investment bank Donaldson Lufkin Jenrette and a group of large US bondholders is also likely to discuss the possibility that some of GPA's dollars 2bn worth of unsecured debt be converted into equity.

The latest deadline for expiry of the bank waiver is being seen as a clear move by GPA's bankers to put maximum pressure on the bondholders ahead of next week's meeting.

Sources close to the restructuring of the group said it was also designed to allow GPA more time to negotiate with GE Capital of the US and another unnamed investor about a possible equity injection. GPA still needs to attract fresh investment of dollars 200m to trigger a rescheduling of the dollars 3.6bn in bank debt and dollars 9bn worth of its dollars 12bn aircraft order book.

If the bank waiver is not extended beyond a week on Monday and GPA has failed to strike a deal with its bondholders then the company will have little option but to go into examinership - the Irish equivalent of administration.

Examinership would protect GPA from its creditors, save some dollars 250m in annual interest repayments, and give the management some continued involvement in the running of the business.

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