Future of MyTravel in doubt after bondholders reject rescue plan

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The Independent Online

The future of the struggling tour operator MyTravel was plunged into uncertainty yesterday when bondholders refused to back its proposed £800m debt-for-equity swap, because they wanted more than the 8 per cent slice in the company they were offered.

The future of the struggling tour operator MyTravel was plunged into uncertainty yesterday when bondholders refused to back its proposed £800m debt-for-equity swap, because they wanted more than the 8 per cent slice in the company they were offered.

MyTravel will start court proceedings today to implement an alternative plan, a so-called scheme of arrangement, which it says does not require the approval of the holders of £216m of convertible bonds. But a source close to the bondholders said they would challenge this in court. "It's not a case of bondholders holding the company to ransom: it's the opposite - MyTravel is trying to force through something that is inequitable," he said, adding that the bondholders did not want to go to court, but the company had refused to negotiate with them.

MyTravel has threatened to slash the bondholders' stake to 2 per cent under the alternative plan. But by 5pm yesterday the company had received backing for its restructuring from holders of just 0.23 per cent of its bonds.

Today's court hearing will determine whether the alternative scheme can go ahead without bondholders' approval, and is expected to take one to two days. Then - depending on the outcome - the scheme would be put to shareholders and creditors, and would have to be approved at a second court hearing on 20 December. The bondholders have until then to back the original rescue plan.

Michael Beckett, MyTravel's chairman, said yesterday: "I am disappointed that so far the bondholders have not supported our consensual restructuring proposal, which I believe is more than fair to them. However, I am encouraged that we have now received the support of the substantial majority of our lenders."

Under the restructuring plan, the 20-plus lenders will own 88 per cent of the company while shareholders will retain just 4 per cent. Up to 50 executives could get a 5.6 per cent stake under a share option scheme.

MyTravel, which owns Airtours and Tradewinds, racked up £1.3bn debts during an expansion drive. It has warned it would lose its Civil Aviation Authority licence and cease trading if the restructuring is not implemented by the end of the year.

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