MyTravel wins court battle with bondholders over restructuring

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The Independent Online

MyTravel, the troubled tour operator, won the right yesterday to exclude its bondholders from a vote on its restructuring, but faces the prospect of further litigation after they threatened to appeal.

MyTravel, the troubled tour operator, won the right yesterday to exclude its bondholders from a vote on its restructuring, but faces the prospect of further litigation after they threatened to appeal.

Bondholders had opposed the company's proposed survival plan, under which it intends to force through an £800m debt-for-equity swap without their consent. MyTravel offered the holders of £216m convertible bonds an 8 per cent stake in the company, less than they wanted, while its lenders would get 88 per cent and the shareholders 4 per cent.

The High Court ruled that MyTravel could call meetings of shareholders and creditors to approve the restructuring. However, the court must give its final approval on 20 December before the restructuring can take place.

MyTravel's initial draft of the scheme was rejected by Mr Justice Mann on a legal technicality, and the company had to submit a new plan. But the judge said: "It is quite clear to me that the economic interest of the bondholders in the company is nil. There is no serious prospect of their getting anything out of a liquidation." He ruled that the bondholders should pay their own legal costs.

The bondholders have seven days to appeal. MyTravel will seek approval for its restructuring from shareholders and creditors on 13 December. The company said: "The board believes that this is an important milestone in the restructuring process and the way is now clear for the restructuring to be complete by the end of the year."

The bondholders disputed the company's version of events, saying the original scheme was ruled unlawful. A statement on behalf of the convertible bondholder committee, which includes Fidelity, Société Générale, Lehman Brothers and New Star Asset Management, said: "The committee disputes the judge's finding that bondholders have no present interest in the company's assets, and does not consider that the company can lawfully dispose of all its assets without making provision for the claims of bondholders."

The committee also said that the bondholders were now being offered a 4 per cent slice of MyTravel under the current scheme.

MyTravel has warned that it could lose its trading licence with the Civil Aviation Authority.

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