Sea Containers edges nearer to bankruptcy
Sunday 15 October 2006
Sea Containers, the stricken owner of rail company GNER, could file for Chapter 11 bankruptcy protection in the US as soon as tomorrow after crisis talks stalled over its pension deficit.
The impetus for the filing would be a $115m (£62m) bond payment due today. "They aren't going to make the payment," said a source. "They will file rather than let somebody do it for them."
The company, led by Bob MacKenzie, has been holding marathon discussions over the weekend. "We have every intention of continuing to trade," said a spokeswoman. "We are in survival mode, but we see a way through this."
The company's pension deficit, however, is likely to dash any attempted deal to avert bankruptcy, sources said. Bankers Houlihan Lokey Howard & Zukin and law firm Bingham McCutchen hosted a bondholder conference call on Friday to discuss the pension deficit, which as of December last year stood at $88m. Creditors were told on the call that the company's liability could double to at least $175m if the UK pension regulator decided to wind up the pension fund.
If it does, the regulator could then invoke a clause of the Pensions Act under which Sea Containers would have to find an outside insurance company to buy the liabilities. As an effective fire sale, that would push the price up, so causing the deficit to rocket.
Houlihan Lokey and Bingham McCutchen are leading an ad hoc group of creditors but have not been hired yet. Rather, they are angling to represent a creditors' committee if one is formed. So far, bondholders have been hoping for a deal to avoid a court restructuring.
Sources said there was still a chance that such major American hedge fund investors as Appaloosa Management, Newcastle Partners or Reed Conner & Birdwell could yet inject cash in exchange for a large stake in the business.
International Women's Day 2014: The shocking statistics that show why it is still so important
Feminist quotes to inspire you on the International Women's Day
Oscar Pistorius trial: Never mind a media scrum – murder case becomes bizarre safari following the tracks of a wounded lion
International Women's Day 2014: Mothers and daughters describe their hopes and dreams in touching photographs
International Women’s Day: 'I've just done what I damn well wanted to' - feminist quotes from female icons to inspire you
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
- 1 To those who can’t see the point of International Women’s Day: you are the very reason it exists
- 2 International Women's Day 2014: The shocking statistics that show why it is still so important
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Too upsetting? Academy members voted for Oscar-winning 12 Years A Slave 'without watching it'
- 5 Liam Neeson turned down James Bond role because Natasha Richardson said she wouldn't marry him if he took it
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...