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MyTravel reaches agreement to extend maturity of convertibles
By Carlise Newman
Chicago, Aug. 1 - MyTravel Group plc said it reached an agreement in principle to extend the maturity of its £221.6 million of convertible bonds by three years to January 2007.
Under the agreement with bondholders, MyTravel will issue shares and warrants to the holders to subscribe to up to 128.6 million ordinary shares in return for conversion of the same nominal amount of bonds, will increase interest on the bonds to 7% from 5.75% and pay a "success fee" equivalent to the success fee payable to the banks and other creditors, which are party to the override agreement announced by the company on June 6.
The fee would be based on a percentage of the increase in the market capitalization of the company above £40 million on the date the bonds are redeemed or refinanced. The maximum percentage would be 2.5%, capped at £11 million.
The terms of the proposal will to be formally put to bondholders for their approval at a bondholders meeting and also require agreement by the override banks.
In addition, MyTravel revised its expectations for its financial results for the year. At the time of its interim results on June 6 the company expected that the summer performance would be better than last year. The board now believes that operating profit for the second half will be similar to the result for the second half last year.
The change in expectations is due to the lower margins than expected during the summer, a result of pricing decisions made last year in the U.K., cost controls in the U.K. airline and difficult market conditions in Scandinavia and North America.
The board said it continues to be confident about its ability to deliver the cost savings it has identified having already achieved its targets for 2003.
MyTravel, a U.K. travel planner, said it has also identified a number of businesses which could be attractive to purchasers, including a number of stand-alone U.S. businesses.
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