Airline Partners Australia is preparing to move to Plan B
A report in the Sydney Morning Herald this morning says that Airline Partners Australia is preparing to move to Plan B in its bid to gain control of Qantas, by laying the groundwork for a new debt package that will allow the consortium to change the terms of its $11.1 billion takeover bid.
The consortium appears last week to have set up a new business vehicle, named Airline Partners Australia Finance No.2, in which it plans to house its debt package, with APA spokesman, Martin Debelle saying, “It’s a company that’s been registered by the lawyers as part of the debt package”.
The moves come as Qantas’s chairman, Margaret Jackson continues to exert pressure on the consortium to come up with a new debt package, allowing it to drop the 90% acceptance condition.
The Macquarie and Texas Pacific-led consortium is now assessing whether it can lower the condition, which will allow it to sidestep two institutional shareholders holding out for a higher bid, but to do this, APA needs to totally renegotiate the terms of its $10.7 billion “convenant lite” debt financing package with its key lenders: Morgan Stanley, Calyon, Citigroup, Deutsche Bank, Goldman Sachs and the Royal Bank of Scotland.
But despite the debt vehicle being registered one business day after fund manager Balanced Equity Management said it would not accept the $5.45 a share bid, APA claims the new vehicle was set up as part of the existing debt package.
With the offer due to expire on April 20, sources in the debt syndicate have indicated it will take at least two weeks to get a new finance package in place, with the current finance package dependent on APA gaining 100% control of Qantas so the debt can be secured against the airline’s fleet, which is valued at $11 billion.
Under an alternative plan, it is proposed APA could secure the debt against future dividends from Qantas if it fails to gain full control of the airline.
Despite APA effectively gaining 70% acceptances when factoring in the 40 per cent of Qantas now held by hedge funds, the Qantas board has rejected supporting a scheme of arrangement which would only need 75% support for the takeover.
Some directors fear unions could also muster shareholders to vote against the scheme.
Report by The Mole from The Sydney Morning Herald
John Alwyn-Jones
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