22nd Jan 2014 11:25
LONDON (Alliance News) - Travelzest PLC shareholders will lose everything after a group of them blocked a proposal that might have allowed the company to come out of administration with a highly diluted share base and a small dividend for its unsecured creditors.
In a statement, the travel company said a group of shareholders claiming to represent 28% of its total shareholding had advised it that they wouldn't support its exit from administration via a process known as a company voluntary arrangement.
That prompted the unnamed parties who were considering funding the rescue plan to withdraw their offer, meaning the company won't be able to come out of administration, it said. The proposal would have needed to be supported by no less than 75% of existing shareholders in a vote.
The administrators will now dissolve Travelzest.
Time finally ran out for Travelzest in November 2013, when it called in administrators after its lender demanded repayment of all the money it was owed, a bill the company couldn't afford.
It had been struggling with its debts for several years, carrying on trading in the months leading up to administration only because its lender granted it week-long extensions to its working capital facility. Its primary lender had been Barclays, but the bank passed the debts on to Elleway Acquisitions Ltd in September, who finally called in the debt in November.
It had warned at that time that shareholders were unlikely to get anything back for their investments. However, in its statement Wednesday, it said the rescue proposal would have "resulted in a small dividend to unsecured creditors and a diluted but tradeable shareholding for existing shareholders."
The company has been struggling for several years. As far back as 2011 it had to restructure its debt facilities with Barclays. That year it had a takeover offer from Red Label Vacations Inc, but talks came to an end because Travelzest said the price being offered undervalued it.
It shut its UK travel operations after the Red Label talks failed, focusing on its Canadian travel businesses. Its management at the time then stepped in with an offer to buy the Canadian business, but the talks were terminated in 2012 with Travelzest's board again refusing to accept the price being offered.
Jonathan Carroll, the company's former Chief Executive who led the management buyout attempt, started litigation against Travelzest in Canada in August. The company had said it would defend the claims.
By Steve McGrath; [email protected]; @stevemcgrath1
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