The Barbados and St Vincent and the Grenadines governments have agreed to sell their shares in the cash-strapped regional airline, LIAT, to accommodate a new reorganisational plan outlined by Antigua and Barbuda.
Antigua and Barbuda Prime Minister Gaston Browne, in an interview with the Caribbean Media Corporation (CMC) following Monday night’s shareholders meeting, also announced that an agreement had been reached to sell three of the aircraft that had been acquired with funds provided by the Barbados-based Caribbean Development Bank (CDB).
The other major shareholder government of the Antigua-based airline is Dominica.
“The real substance of the meeting is that we have agreed to sell the three planes that are owned by LIAT and charged to the Caribbean Development Bank, the loans which were actually guaranteed by the shareholder governments,” Browne told CMC.
He said the proceeds from the sale would be “utilised to repay or to reduce the outstanding debt.
“There was also a decision that St Vincent and the Grenadines and Barbados will turn over their shares in LIAT to Antigua and Barbuda for one EC dollar (One EC dollar=US$0.37 cents) each. In addition, Antigua and Barbuda will move immediately to appoint the administrator and the administrator will meet with creditors to include the staff to put a plan in place to repay them.
“This re-organisation obviously will include a significant haircut to all creditors including the staff and the outstanding severance, salaries and wages and 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,” Browne told CMC.
According to the new plan, Antigua and Barbuda is proposing re-investment of EC$108 million with St John’s indicating that under the new plan it is prepared to underwrite up to 50 per cent of the required capitalisation.
“The new capital invested during reorganisation will be protected, in that it will rank in priority above all other creditors in the unlikely event of liquidation,” it said, noting that the remaining EC$54 million to be shared by other private and public sector entities, including existing shareholder governments.
However, the Antigua plan said if the existing shareholder governments are not interested in investing in the reorganised LIAT, they will be requested to surrender their shares for EC$1.00, which it claims is a superior offer to what they would get in liquidation.
The plan also notes that LIAT, after it returns to good financial health, is to offer jet services out of Miami on a wet lease of two jet aircraft, should necessary feasibility studies confirm that such services would be profitable.
The plan indicates that the jet service could also open up new markets that connects the Caribbean and Latin America to include Panama to facilitate inter-regional movement of people and goods.
Prime Minister Browne told CMC that the reorganised LIAT (I974) limited would be different from a restructured entity “where you restructuring to sustain debts but you have no deep cuts
“In a reorganised LIAT, creditors will be asked to take a cut up to 100 per cent in some instances, but on average about 50 per cent. The staff we expect, a 50 per cent reduction in the staff liabilities because if they go to liquidation they will be lucky to get 10 per cent”.
Browne said even though the plan is to sell the three planes owned by CDB, 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 is predicting “significant staff cuts” insisting on a far leaner LIAT, one that will run exclusively on commercial terms and one that is expected to make a profit.
“Routes that are unprofitable, if their governments would like LIAT to operate those routes then they will have to pay some guarantee,” he added.