MyTravel Group's £210 million Orlando facility has more than doubled in value since the troubled U.K. travel agent announced a highly contentious restructuring that will heavily favor bank debt holders over bondholders. Orlando traded at 70-72 last week, up from as low as 30 two months ago. The £400 million bonding facility traded steady at 65 1/2-67 1/2 last week. MyTravel's revolver also traded in the 34-36 context, while the company's convertible bonds and private placement notes were quoted in the mid-teens and the 36-40 range, respectively.
The value of the Orlando facility has shot up as the facility has a higher claim against the company's assets, a buysider said. The value of the different facilities was determined through a model produced by accounting firm Ernst & Young. The higher claim for the Orlando came as a surprise to some original bank-debt holders and buyside firms who sold pieces before the payouts were determined, he noted. MyTravel officials did not return calls.
MyTravel's restructuring plans, if successful, will involve an £800 million debt-to-equity swap (LMW, 10/22). The swap will include the revolver, $100 million of U.S. private placement notes and the Orlando facility together with aircraft lease financing arrangements and £216 million of convertible bonds. Upon completion of this plan, lenders, led by The Royal Bank of Scotland, will own 88% of the company's equity, while bondholders will own 8%. Current equity holders will retain 4%.
The restructuring plans have been delayed though because of bondholder opposition. Last week, the restructuring proposal only obtained approval from 0.23% of the bondholders. MyTravel will now proceed with a contingency plan that will not require the consent of the bondholders. Three weeks ago, MyTravel warned bondholders that their stake in the company could be reduced to 2% if they do not go ahead with the restructuring, leaving them even worse off than the shareholders.
There is a sense of urgency to complete the restructuring as the Civil Aviation Authority (CAA) has pressured the lenders to settle their differences or it will withdraw the company's license to operate. If the CAA withdraws the license, MyTravel may have to file for bankruptcy.