MyTravel shareholders to lose out

INVESTORS in MyTravel are set to be all but wiped out after the troubled tour operator became the latest top company to unveil a major debt-for-equity swap.

In a £1.3bn restructuring, shareholders will be left with just 4% of their company. MyTravel shares which traded as high as 544p five years ago, fell 10% today on news of the restructuring plan, down 0.5p to 4.8p.

The company hopes to get its restructuring completed by the end of the year when lenders, led by Royal Bank of Scotland and Barclays, bondholders and other creditors are issued with equity worth about £800m.

In addition to renewed bonding facilities, under the proposals, the company will be left with liabilities of around £300m. It is hoped the shareholders and bondholders will approve the plans at extraordinary meetings before the end of the year.

In line with other traditional package holiday operators, MyTravel has been hurt by the aggressive pricing of budget airline pioneers Ryanair and easyJet, as well as the rise of internet travel agents such as lastminute.com. Expedia and Travelocity.

Today the company indicated it is still under the cosh as it said it expects only to break even in the year to the end of September.

However, that's a significant improvement compared with an operating deficit of £356m last year when other write-offs and provisions took losses to £911m.