Tony Ryan in crisis talks on dollars 35m loan

TONY Ryan, chairman of troubled Irish aircaft leasing group GPA, is in crisis talks with his bankers over huge losses on purchases of GPA shares he financed last year through a personal dollars 35m ( pounds 23.6m) loan. A collapse in the value of the shares to a fraction of the price he paid for them has left the loan inadequately secured.

A group of banks led by US securities house Merrill Lynch advanced the loan, which is secured on the 9.36 million shares in GPA that Dr Ryan was allowed to buy at dollars 4 a share as a bonus shortly before the aborted flotation of GPA last summer. The shares were expected to be priced at dollars 30 each, which would have given Dr Ryan a profit of dollars 240m.

However, refinancing proposals put in the last few daysto the bankers owed dollars 5.5bn by GPA in effect value the company's shares at just dollars 1 each. This means Dr Ryan does not have sufficient security for the loan - a fact well recognised by the bankers.

'We have had discussions between Dr Ryan and the group of banks to refinance the loan,' said a spokesman for Merrill Lynch. 'Dr Ryan has put forward a variety of proposals and we have had discussion.' It is understood that the banks are pressing Dr Ryan to come up with more collateral. However, it is not clear how he will be able to accomplish this.

Typically for such loans, banks demand security worth at least 50 per cent more than the loan - more than dollars 50m in Dr Ryan's case.

Dr Ryan has 9.36 million other GPA shares, but even if those were put up as extra collateral, the man who describes himself as a simple Tipperary farmer would still have only dollars 18.7m worth of shares securing a loan of nearly double that amount.

Dr Ryan's GPA shares are not the limit of his wealth. He has an estate of many thousands of acres in Tipperary, which includes a large country house. He uses the house as an office and entertaining suite, and there is a computer bank in the basement that allows him to control GPA from his home. Land prices in the Republic of Ireland, however, have fallen dramatically in recent years.

He also has homes in Spain, Monte Carlo and Mexico, where his estate on the West Coast is near that of Sir James Goldsmith.

His other assets include a sizeable art collection with a leaning towards contemporary Irish art and paintings with connections to transport and aircraft. Camille Souter is a favourite artist.

Two years ago, Dr Ryan sold his 4.9 per cent stake in Bank of Ireland, one of the two groups that dominate Irish banking, for pounds 27.5m - about pounds 5m less than he was believed to have paid for it.

The Ryan family has also lost substantial amounts of money on Ryan Air, the airline founded by Dr Ryan's three sons.

Although the group is now profitable, about pounds 20m has been written off by the family in losses on the airline in the late 1980s and early 1990s. Two of the sons remain on Ryan Air's board, but only as non-executives.

Dr Ryan is not the first GPA director to suffer financial headaches as a result of borrowing to finance purchases of shares in the leasing group.

In January, Colm Barrington, chief executive of GPA Capital, took Bank of Ireland to court to stop them freezing dollars 454,000 he has in an account with them after he defaulted on a repayment for a dollars 1.5m loan he took out to buy GPA shares.

Mr Barrington told the bank that if he defaulted the bank should merely take his share in GPA and sell them to settle the debt. However, the bank - which is one of the underwriters for a proposed dollars 200m issue of convertible shares by GPA - claimed that the shares were unsaleable and in effect worthless.

Mr Barrington won his action.

Dr Ryan could not be reached for comment.

(Photograph omitted)