Urgent talks to save GPA rescue

RUSSELL HOTTEN

GPA, the aircraft-leasing group rescued by GE Capital, was due to start urgent talks today in a bid to settle a dispute that threatens to force it into liquidation. The company said a creditor had refused to agree a planned $2.7bn refinancing that would bring to an end two years of restructuring.

"We have to sort this out within several days," said John Tierney, deputy chief executive. "Otherwise the GPA directors will have to seriously consider all options, including liquidation and protection from creditors."

The Public School Employees' Retirement System, one of America's biggest pension funds, was the only creditor not to have backed the refinancing, Mr Tierney said.

PSERS owns 30 per cent of $139m secured notes in GPA, but also holds $100m of preference shares, which are not included in the refinancing.

The pension fund could not be contacted, but is thought to be holding out for a better deal on preference shares, which it bought before a collapse in GPA's share price in 1993.

Mr Tierney said: "Their position defies logic... they are risking everything to gain a bit of extra leverage."

Patrick Blaney, chief executive, and GPA's advisers from Morgan Stanley, were due to meet PSERS in New York. "If we can reach agreement this deal will go before the market within a week or two," Mr Tierney said.

GPA's plans for a flotation in 1993 were a spectacular flop, and the company, formerly run by Tony Ryan, has been negotiating its way out of problems ever since.

The restructuring, which needs approval from the US Securities and Exchange Commission, is to address GPA's commitment to repay pounds 2.5bn in secured debt due in September 1997, and raise about $500m of working capital. The plan involves selling 220 aircraft leases, about 50 per cent of GPA's fleet, to investors and setting up a separate company.