5th Nov 2013 11:46
LONDON (Alliance News) - Travelzest PLC Tuesday warned its shareholders they are highly unlikely to get a single penny of their investments back after administrators were called in when it ran out of money.
Time finally ran out for the travel group Monday after its lender demanded repayment of all the money it is owed, a bill the company cannot currently afford.
The company has been struggling with its debts for several years, carrying on trading in recent months 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 Monday.
In a statement Tuesday, Travelzest said Elleway had called in administrators Grant Thornton and bought all of the company's Canadian operating assets, meaning that customers and suppliers will now trade with an Elleway company called Aldenham Canada. Travelzest's Canadian shell companies will be wound down.
"The proceeds from the disposal of the Canadian Subsidiaries are not expected to be sufficient to discharge the company's remaining secured and unsecured creditors and it is therefore highly unlikely that shareholders will receive any return for the shares they hold," Travelzest said in a statement.
It said the decision to call in administrators was taken after the sides explored all options to raise the additional capital needed to keep Travelzest trading.
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.
The company's biggest shareholder is former director Mark Molyneux with a 10.7% stake, according to data from Hemscott. Molyneux left Ernst & Young in 2006 to join the board of Travelzest, saying he wanted the challenge of building a new career. He resigned from Travelzest's board in April of this year "to pusue his other business interests", according to the company. In July of this year, he called a general meeting of Travelzest shareholders to try and remove Carroll and withdrew the request when Carroll resigned.
The company's second-biggest shareholder, with a 12.02% stake, is Merchant Securities, according to Hemscott.
By Steve McGrath; [email protected]; @stevemcgrath1
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