MyTravel brokers sound the alert

STRICKEN tour operator MyTravel is on the verge of going bust, its own broker says. Analysts at investment bank Credit Suisse First Boston have warned that the former Airtours company is in grave danger failing to secure new loans when a £250m overdraft facility runs out next March.

MyTravel's shares have collapsed after a string of profit warnings and the unearthing of a £50m accounting black hole. It is due to post its full-year results on 26 November.

On the same day, chairman David Crossland has promised to report 'in full' the findings of a strategic review by Deloitte & Touche, MyTravel's new auditor, which replaced scandal-hit Andersen.

But CSFB - joint broker to MyTravel alongside Deutsche Bank - fears that Deloitte will refuse to sign off the accounts. In a note to clients, it says: 'We believe the banks will not be willing to finalise support for working capital facilities until investigations and the 2002 year-end audit are complete. Auditors are unlikely to be able to sign off the accounts of MyTravel unless the working capital facilities are committed by the banks.'

In other words, MyTravel is caught in a Catch-22 of being unable to secure loans without fully signed-off accounts, and unable to have the accounts signed off without the loan facilities in place.

Talks between MyTravel and its bankers, Barclays and Royal Bank of Scotland, about renewing the £250m loan were put on ice earlier this month after MyTravel's latest profits warning.

CSFB's note also claims MyTravel has suffered a 'systemic breakdown' of controls at boardroom level, and highlights its poor corporate governance and 'aggressive accounting' practices.

Investors say that with a question mark hanging over the company's finances, it is extremely unlikely that another tour operator would want to buy it. Private equity buyers would be put off by the cost of a compulsory bond, required by the Civil Aviation Authority, that protects customers in case holiday firms go bust.

A MyTravel spokesman said that it was business as usual: 'We are ploughing ahead with the audit and have nothing else to say.' He refused to say whether the position of finance director David Jardine was safe.

The latest casualty of the crisis is MyTravel's company jet. The Falcon 9000 plane has 'been sold or is about to be sold', said the spokesman. MyTravel's brands include Going Places, Cresta and Late Escapes.

Deloitte has already refused to sign off the accounts after discovering that income from insurance policies was being credited too soon. The crisis has cost chief executive Tim Byrne his job. Jardine offered to resign but stayed on while Crossland postponed his retirement plans and resumed day-to-day control.

The company is set to go into formal sale talks to break up the business this week, The Business reported. Several private equity companies such as 3i, HG Capital and CVC have approached MyTravel about buying parts of the firm.