Reynolds to rescue GPA restructuring with pounds 15m: Government steps in to assist dollars 5.5BN debt refinancing

THE IRISH government has come to the rescue of GPA, the debt-burdened aircraft leasing group, with a pounds 15m capital injection.

The move is calculated to ensure the success of GPA's attempt to restructure its dollars 5.5bn (pounds 3.7bn) debt mountain.

The company's bankers have demanded an injection of fresh equity, by way of a dollars 200m convertible preference issue, from investors before they agree to the refinancing package.

But Aer Lingus, the state-owned airline that has an 8 per cent stake in GPA, is not able to take up its rights because of its own precarious debt position.

An Irish government spokesman confirmed yesterday that the cabinet had agreed in principle to transfer Aer Lingus's rights to new equity in GPA to the Shannon Free Airport Development Company (Sfadco).

But it is understood that the company has still to reach agreement with Sfadco over the terms of the deal.

Aer Lingus is itself seeking funds from the Irish government, as part of a rescue plan proposed by Bernie Cahill, its new chairman.

It is understood that the airline also wishes to dispose of its stake in GPA, as the proposals involve it divesting all non-core activities and holdings. But there are no plans currently to transfer the stake to Sfadco.

The Irish prime minister, Albert Reynolds, said at the weekend that the government would be investing in GPA on the same basis as other shareholders, and that it expected a return 'in time'.

GPA is based in the Shannon Development area, and although the company directly employs only 300, the government is keen to ensure its future because of its status as a prestigious global company headquartered in the region.

The company, the largest aircraft leasing concern in the world, is attempting to restructure dollars 5.5bn worth of debt. Its problems stem from the failure of a planned flotation on international stock markets last summer, and from recession in the airline industry.

A GPA spokesman declined to comment on reports that the Irish government would invest. 'The negotiations with the banks, shareholders and aircraft manufacturers are at a sensitive and confidential stage,' he said.

But it is understood that the company has had discussions with several Irish government departments and state agencies during the restructuring talks.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power