LIAT shareholders, which include the governments of Barbados, St. Vincent and the Grenadines and Dominica, met by way of video conference late on Monday for Browne to present a plan to reorganize the cash-strapped LIAT.
This is in spite of the fact that Barbados and St. Vincent and the Grenadines were way down the wicket in their plans to liquidate the airline and divest the routes to six airlines already operating in the region.
“I think that our colleagues understand that there’s significant merit in the proposed reorganization plan and we were able to come to a consensus,” Browne announced Tuesday morning, revealing that his regional counterparts have backed his plans to reorganise the ailing carrier.
“The meeting went very well, the tone of the meeting was very respectful, the interventions were heard and we came to the consensus that we should sell the three planes that are owned by LIAT and charged to the Caribbean Development Bank (CDB).
“What that will do, that will help to literally eliminate the debt from LIAT’s books for those planes, and, in addition, the proceeds will be utilized to pay down the loan, even though there would be a residual value. The governments will continue to make payment on the residual value after the proceeds of the planes are applied to the loans at the Caribbean Development Bank,” Browne explained.
“There’s a re-fleeting loan and you also would have had a number of additional loans that were extended to the governments in order to support LIAT over the years. So, if you were to aggregate all of them, after the aircraft would have been sold and the proceeds applied, I believe there will be a shortfall of about US$45 million, which will be shared proportionally by the shareholder governments and obviously we will have to service those loans until they are retired.
One of the requirements of the reorganization is the appointment of an administrator, the names of which will be shortly submitted by Antigua and Barbuda. These include Wilbur Harrigan of PKF Chartered Accountants and Business Advisers, and Cleveland Seaforth of BDO.
Browne explained that “the company is not out of the woods as yet, as the administrator on the other hand will have to present the plan to the court within a matter of weeks for the reorganization of LIAT. If the administrator fails to get the haircut from the various creditors, then LIAT will still be faced with liquidation.”
“Having done that plan, we will negotiate with creditors to bring down the debt or to bring liabilities and assets to some form of balance and at the same time to come up with an operational plan, which will see a very lean LIAT, especially during this period of COVID,” Browne said.
The Antigua and Barbuda prime minister is hopeful that the process to reorganise the airline could be wrapped up between 60 to 90 days.
“We are hoping between 60 and 90 days. The lag may not necessarily be bad in the sense that a number of countries have not opened their borders as yet and the demand for passenger lift is relatively low at this time,” he said.
“We believe that next winter there will be a significant increase in demand and that will be a good time for LIAT to recommence operations,” he added.
St. Vincent and the Grenadines, and Barbados have said they could not afford to inject more state funds into the already cash-strapped airline whose fortunes have been worsened by the closure of most airports across the Caribbean due to COVID-19.
Most of LIAT’s staff are based in Antigua, and Browne wants to ensure that people go back to work as soon as possible.
He is maintaining a position of 50 per cent cut on severance payments. “It’s the only way that it would work [that is] by significantly reducing the severance payments and also by slashing the amounts due to other creditors,” he said.
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