4th Nov 2013 15:24
LONDON (Alliance News) - Time finally ran out for travel group Travelzest PLC 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.
Travelzest has wanted to renegotiate the terms of its loans and banking facilities because interest payments were hitting earnings. The company called the situation unsustainable, and was trying to find other sources of funding so it could refinance and make new investments.
Last week, Elleway had extended its working credit facility until today, the latest in a series of extensions. However, Travelzest had cautioned each time it got an extension that Elleway could call in its debts at any time. It was completely reliant on the working facility to carry on trading.
Travelzest Monday said that its shares have been suspended from trading on AIM with immediate effect because Elleway's repayment demand means "there is a material uncertainty around the company's short term working capital position".
It said it would make further announcements as appropriate.
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.
Travelzest shares last traded Monday afternoon down 6.7% at 1.40 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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