MyTravel creditors get right to appeal

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The Independent Online

Bondholders of the struggling tour operator MyTravel have won the right to challenge its restructuring plans, which are vital to the company's survival, next week.

MyTravel has been involved in a protracted wrangle with the holders of £216m of convertible bonds over what stake they should get in the company's proposed £800m debt-for-equity swap. Bondholders rejected the initial offer of an 8 per cent stake as "inequitable", whereupon MyTravel went to the High Court to obtain the go-ahead for an alternative restructuring plan without the consent of bondholders. It will present the so-called scheme of arrangement to the High Court for approval next Monday.

Under that plan, the bondholders' stake could be slashed to a mere 2 per cent. The other creditors would get the lion's share, at least 88 per cent, and shareholders at least 4 per cent.

The Court of Appeal yesterday gave the bondholders' committee, comprised of Fidelity Investments, Société Générale, Lehman Brothers and New Star Asset Management, permission to appeal against the High Court's ruling that they had no economic interest in MyTravel. The Court of Appeal will give the full reasons for its judgment tomorrow.

MyTravel has argued that the bondholders have no economic interest because their claims would be subordinate to those of the unsecured creditors if the company went bankrupt.

The company played down the significance of the bondholders' appeal, saying the Court of Appeal ruling would not affect its timetable. Its shareholders and lenders, led by Royal Bank of Scotland and Barclays, backed the restructuring plans at a separate meeting yesterday. Michael Beckett, the chairman, said: "It only remains for the scheme to be sanctioned by the court at the hearing scheduled for 20 December. This will enable us to complete the restructuring by the end of the year."

MyTravel, which owns Airtours Holidays, racked up £1.3bn of debts during an expansion drive. It warned it would lose its trading licence from the Civil Aviation Authority, and cease trading, if it does not complete the restructuring before the end of the year. It also wants to avoid paying more interest on its huge borrowings, with the next interest payment due on 5 January.