MyTravel wins court battle

TROUBLED tour operator MyTravel has won a court battle to deny its bondholders a say in the restructuring aimed at saving the company.

The High Court ruled that the company could restructure through a scheme of arrangement, which means it can undertake the £800m debt-for-equity swap without the approval of the bondholders.

Bondholders will receive only 2% of the company under the new deal, compared to the 8% they were originally set to receive.

Shareholders will receive 4%, while the company‘s 20-plus creditors will get the remaining shares.

The company had to go back to Court twice on the same day to win approval. Mr Justice Mann initially rejected MyTravel‘s request on a technicality.

Bondholders rejected the chance for a consensual agreement when they shunned MyTravel‘s original restructure offer.

MyTravel has endured a revolving door of company directors following its rapid decline since 2002. The company failed to cut back on capacity when the package holiday market collapsed following the terror attacks on the US in September 2001.

It has also suffered accountancy errors, which have forced it to restate its financial results.

The company has said it must complete its restructuring by the year-end to keep its trading licence with the Civil Aviation Authority (CAA).

However, it is unlikely the CAA would pull the plug on the company as its failure would result in a huge financial strain on the CAA's Air Travel Organisers' Licence scheme.

The victory will be a boost to the embattled company as a lengthy court battle could have deterred potential customers from using the operator over the key Christmas booking period.

MyTravel has seen its share price drop from more than 500p in 2000 to 3.6p.

The bondholders, including several high profile asset management companies, indicated they would appeal the decision.

A shareholder meeting will take place in December and the company hopes to have the restructuring completed by the end of the year.

A MyTravel statement said: 'The board believes this is an important milestone in the restructuring process and the way is now clear for the restructuring to complete by the end of the year.

'In the event that there is an appeal against the court's decision, the company will proceed with the scheme process while the appeal process takes its course.'