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LIAT goes into administration amid shareholder shake-up

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Web site: http://www.liatairline.com/
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LIAT goes into administration amid shareholder shake-up

Unread post by bimjim » Mon Jul 27, 2020

https://www.ch-aviation.com/portal/news ... r-shake-up

LIAT goes into administration amid shareholder shake-up

LIAT (LI, Antigua) has entered into court-appointed administration in Antigua & Barbuda after a high court judge granted a petition for the cash-strapped pan-Caribbean carrier's reorganisation. The Guyana-born Chairman of BDO Antigua and Barbuda, Cleveland Seaforth, has been appointed LIAT's administrator for the duration of proceedings.

“It was a petition to begin the process of reorganisation by the appointment of an administrator and a stay of all proceedings against LIAT, civil, liquidation proceedings by the shareholders, creditors ..." The administrator appointed by the court will be "able to take a deep look at LIAT and to make recommendations one way or the other,” Senior Counsel Anthony Astaphan told Barbados Today newspaper following the court hearing in St Johns on Friday, July 24.

Antiguan Prime Minister Gaston Browne's decision to press ahead with placing LIAT into bankruptcy protection comes after Barbados and St. Vincent & the Grenadines, two of the airline's largest shareholders, voted in favour of liquidating the ailing airline. LIAT's entry into reorganisation therefore puts plans for a July 31 creditor vote on whether to liquidate the carrier on indefinite hold.

As previously reported, the Government of Antigua & Barbuda has been the biggest proponent of LIAT's reorganisation given what it has said would be the minisucle returns liquidation proceedings would present to shareholders and creditors alike. To that end, the country added business rehabilitation provisions to its Companies Act earlier this month and has even incorporated a NewCo, LIAT 2020 Ltd., to ensure the airline's continuity.

“The next step would be the Administrator assuming control of the assets and management of LIAT, and to begin the exercise imposed on him by the legislation of the amendments that were made recently," Astaphan added.

“It is a very, very important step because it gives the Prime Minister the opportunity to be able to work with the Administrator, and for the administrator to take a look at everything to be able to come to the conclusion whether LIAT 1974 Ltd, of one sort of the other, would be able to be reorganized and to be back in the sky."

Antigua has put the cost of restructuring LIAT at XCD108 million East Caribbean dollars (USD39.96 million) of which 50% will come from the Antiguan government with the remainder expected to come via other shareholder governments or even private investors.

Following a meeting last week of the airline's shareholders, Browne said that both Barbados and St Vincent & the Grenadines have agreed to transfer their shares to Antigua and Barbuda which will now assume control of the airline.

“One of the interesting things coming out of the meeting is that both Barbados and St Vincent and the Grenadines have agreed to transfer their shares to Antigua and Barbuda for the sum of XCD1 (USD0.36) each. The aggregate shares that would be transferred to Antigua and Barbuda would be around 60 percent between the two governments, so I think that’s a responsible proposition,” he said.

To help raise funds, LIAT's shareholders agreed last week to sell and presumably lease-back the three ATR42-600s it owns but which are held by the Caribbean Development Bank.

“We came to the consensus that we should sell the three planes that are owned by LIAT and charged to the Caribbean Development Bank. What that will do, that will help eliminate the debt from LIAT’s books for those planes and in addition, the proceeds will be utilised to pay down the loan even though there would be residual value. The governments will continue to make a payment on the residual value after the proceeds of the planes are applied to the loans at the Caribbean Development Bank,” Browne added.

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Re: LIAT goes into administration amid shareholder shake-up

Unread post by bimjim » Mon Jul 27, 2020

https://bvinews.com/liat-devises-plan-t ... ee-months/

[BVI] LIAT devises plan to ‘reorganise’ as opposed to liquidating
-- Plans to fly in two to three months
JULY 27, 2020

Residents in the British Virgin Islands with credited accounts in the cash-strapped regional airline, LIAT, may soon be able to utilise their credit as plans have been announced to ‘reorganise’ the airline, therefore staving off previously-announced plans to liquidate the company.

This is according to statements from Antigua & Barbuda Prime Minister Gaston Browne, who gave that indication coming out of a virtual meeting with LIAT’s shareholder governments last week.

He said the current agreed plan is to sell three of LIAT’s planes that are charged to the Caribbean Development Bank. The proceeds from that sale will be used to repay or to reduce the airline’s outstanding debt.

According to Browne, once the current plan is executed without fail, LIAT may likely resume flights within two to three months.

“LIAT has seven other planes on the ground here which are leased planes and we will get on to the lessors and enter into some new arrangement with them to continue to lease several of the planes so that LIAT could operate and we are hoping that LIAT could be back in the air within 60 to 90 days,” Browne said.

Leaner LIAT to be profitable

Prime Minister Browne also said that the reorganised LIAT will be much different than a normal restructured entity whereby companies restructure to sustain debt but have no major cuts in expenditure.

“In a reorganised LIAT, creditors will be asked to take a cut up to 100 percent in some instances, but on average about 50 per cent. The staff we expect, a 50 percent reduction in the staff liabilities because if they go to liquidation they will be lucky to get 10 percent,” he said.

“In addition, the government of Antigua and Barbuda will work along with the administrator to raise additional capital so that the new reorganised LIAT (1974) Limited would have the capacity to operate on a sustainable and profitable basis,” he added.

LIAT not out of the woods as yet

In a subsequent interview, Browne said that his country will be moving to appoint the aforementioned administrator, who will have to present to the court within a matter of weeks the plan for the reorganisation of LIAT.

To this end, he said the airline could still face the possibility of being liquidated if parties fail to comply with the intended requests of the plan.

He said: “If the administrator fails to get the haircut from the various creditors, then LIAT will still be faced with liquidation, so the company is not out of the woods as yet.”

“But in essence our challenges have just started but we are not daunted by challenges and we feel confident that we will be able to raise the necessary capital so that we can put LIAT back into the air to have it flying and to restore LIAT to profitability and sustainability, and we will be using every effort in order to ensure that those objectives are achieved,” he explained.

Barbados and St. Vincent sell shares

Also developing out of the meeting was the agreement of the Barbados and the St Vincent and the Grenadines governments to sell their shares in LIAT to accommodate the reorganisational plan outlined by Antigua and Barbuda.

According to Browne, both governments agreed to sell their shares for one Eastern Caribbean dollar, which is equivalent to US $0.37.

This move by both governments is an indication that neither were interested in investing in the reorganised LIAT, as the plan outlined by Antigua required all existing shareholder governments to either invest in the company or sell their shares.

Customers still in the dark

Earlier this month LIAT had confirmed on their official website that the company was facing the possibility of being liquidated.

Following that announcement, concerns were raised among stranded customers in the BVI with credited accounts who were left in the dark on how or if they will be refunded their monies owed.

LIAT is yet to announce what measures will be taken going forward, but have asked all customers to continue to monitor their page for all future updates.

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