LIAT shareholders reach agreement to sell 3 planes; airline could fly again in 90 days

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Caribbean News Service (CNS) — LIAT’s major shareholders have reached an agreement, which Antigua and Barbuda’s Prime Minister Gaston Browne said could see the airline flying again “in 60 to 90 days.”

The shareholder, which also includes the governments of Barbados, St. Vincent and the Grenadines and Dominica, met virtually late on Monday for Browne to present a plan to reorganize the cash-strapped LIAT.

“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.

“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.

The Antiguan leader said there are a number of LIAT-related loans with the CDB.

“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.

Company is not out of the woods yet. Administer to be appointed

Browne noted that the CDB is a preferred creditor, so the governments cannot allow the loans to go into default, But in essence LIAT would be able to rid it’s books of those debts and give Antigua and Barbuda the opportunity to speak to other creditors to try and reorganize LIAT and make the institution viable.

Antigua and Barbuda will be submitting three names for the position of administrator — among them Wilbur Harrigan of PKF Chartered Accountants and Business Advisers, and Cleveland Seaforth of BDO.

“Antigua and Barbuda will be moving almost immediately to appoint the administrator and 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, so the company is not out of the woods as yet,” Browne explained.

“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.”

Transfer of shares to Antigua and Barbuda

Prime Minister Browne said his colleague prime ministers must be congratulated for this very important step towards saving the LIAT brand.

“One of the interesting things coming out of the meeting is that both Barbados and St. Vincent and the Grenadines, they have agreed to transfer their shares to Antigua and Barbuda for the grand sum of $1 each; and the aggregate shares that would be transferred to Antigua and Barbuda would be around 60 per cent between the two governments. So I think that’s a responsible proposition,” he said.

“I also want to make the point that our challenges, they have just begun in the sense that raising the capital and keeping LIAT alive will be far more challenging than the little battle that we had there to get St. Vincent and the Grenadines and Barbados to surrender the shares so that we could move forward.

“No one should really gloat about this. In fact, I would say if anything that both Prime Ministers [Mia Mottley and Dr. Ralph Gonslaves] should be complimented for the fact that they have seen the need to cooperate with Antigua and Barbuda recognizing how important LIAT is to Antigua and Barbuda and the wider Caribbean.

“But in essence our challenges have just  started but we are not daunted by challenges and we feel confident that we will be able to raise the necessary capital so that we can put LIAT back into the air to have it flying and to restore LIAT to profitability and sustainability and we will be using every effort in order to ensure that those objectives are achieved.

What will happen to the employees?

Browne said St. John’s wants to ensure that people go back to work as soon as possible.

He is also 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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33 COMMENTS

  1. I guess those who saw doom and gloom should now bow their heads in shame. Browne is the best in the Caribbean when it comes to finding solutions for issues no one seem to be able to handle. I can tell Barbadians if they had Browne as Prime Minister they would never be in the arms of the IMF.
    Tabor eat your heart out.

      • simple his life story is one that has experience and seen poverty as none of us will ever have. This is why he has empathy. Empathy is the highest form of Intelligence

        • @Sidelines:Do not celebrate to fast.Let us see what happens in the next 90 days.Because this LIAT matter changes faster than Covid-19 protocols.

          • Why. You should not wait to celebrate till you win the war. You celebrate every battle that you won. Just like if you are in a world cup game. You celebrate each victory. Not just if you win the entire game. LIAT Shareholders were hell bend to liquidate the company. Our PM was able to convince them not to do that. And that alone calls for a celebration. Now up to the next battle. And there are many to follow. It will be a very long road. LIAT problems cannot be solved in just a split second. This will take years to solve. In the meantime lets get to work. One day at the time.

    • Please don’t encourage them to start their political comments. Let’s just get our LIAT fixed or at least on the road to that.

      They will be the first to praise him when/if it succeeds and stomp on him if it fails. You can’t please everyone. Let’s just remain hopeful that they can give it 100% effort.

      • Not them, they are haters in whatever he does. They will never get it in their hearts to thank him. You saw that same hatred displayed in parliament by Trevor Walker. I was able to thank all the organizations in the world for assisting Barbuda but never one thank you to the government who was the catalyst in ensuring these funds came through. These are wicked people. They have a poison heart.

        • @From The Sideline
          What happened to all the funds contributed to rebuild Barbuda? Did Gaston use the money to build the sinking runway? Barbudans don’t have a thing to thank Gaston for as all he contributed to them was a lot of cussing.

    • Your so full of it who knows what will happen in 60 to 90 days why not wait and hear from Barbados PM and st Vincent pm take what Browne is saying with a pinch of salt.

    • From The Sideline thanks for making me laugh. I like most Antiguans and Barbudans would hate to see the demise of LIAT. If Prime Minister Browne can implement policies to save LIAT all power to him. I will still be waiting however to see how can LIAT be taking to the skies in 60 days without any planes. When I heard about the sale of the 3 planes I initially thought that buying them was a part of the Prime Minister’s plan. Anyway, it is still early days and I will wait to see how the LIAT saga unfolds. Again, we all wish to see the best for LIAT and we are particularly concerned about the future of the employees,

      • Mr. Tabor, you cannot have things both ways. Its either you support the PM and his effort or you don’t. But to say you do and than say you watching to see if he fails or not. You want to play it safe. Yesterday you sang a different tune. You saw lawsuits going all over the place because of the planes. Then your party accuse Browne of having no diplomacy. Yet it is the same Browne that always get things done. We saw the same thing with Sandals head Butch. And how bad you guys claimed it would work out for Antigua. In the end Sandals complied with our laws and the hotel reopened and is been going on as if nothing has happened. Listen you and other like minded can sit on the sideline and wish and hope that he fails as much as you want. In the end I’l bet you this man will succeed. It is just in him. Failure is not an option.

  2. From the Sideline, I am suggesting you go back and read the article, READ CAREFULLY, especially the words of PM Browne. Stop being so Browne-struck and go back and read the article….CAREFULLY

  3. The hand of the LORD was upon me, and he brought me out by the Spirit of the LORD and set me in the middle of a valley; it was full of bones.
    He led me back and forth among them, and I saw a great many bones on the floor of the valley, bones that were very dry.
    He asked me, “Son of man, can these bones live?” I said, “O Sovereign LORD, you alone know.”
    Then he said to me, “Prophesy to these bones and say to them, `Dry bones, hear the word of the LORD!
    This is what the Sovereign LORD says to these bones: I will make breath [1] enter you, and you will come to life.
    I will attach tendons to you and make flesh come upon you and cover you with skin; I will put breath in you, and you will come to life. Then you will know that I am the LORD.'”
    So I prophesied as I was commanded. And as I was prophesying, there was a noise, a rattling sound, and the bones came together, bone to bone.
    I looked, and tendons and flesh appeared on them and skin covered them, but there was no breath in them.
    Then he said to me, “Prophesy to the breath; prophesy, son of man, and say to it, `This is what the Sovereign LORD says: Come from the four winds, O breath, and breathe into these slain, that they may live.'”
    So I prophesied as he commanded me, and breath entered them; they came to life and stood up on their feet–a vast army.
    That is the story of LIAT. CAN LIAT FLY AGIAN? With God ALL Things are possible. PM go with God. You are fighting this fight for the people who are so much dependent on the services LIAT provide. And these are many, who do not even have a voice to be heard. Some may not even understand the impact it will have on them. Be it a small netball team wanting to go play a tournament in another Island, our entire Caribbean has been serviced by LIAT in some form. Even to bring the Carnival Queens from all the Islands and there entire costumes to Antigua for the Jaycees Caribbean Queen. LIAT was always there and LIAT will always be there. And we will appreciate LIAT even more as from today.

    • …a which part, fu U chuch dey?
      U a preach to Rass!
      In the Valley of the shadow of death!
      It’s good, that the PM has the fortitude, to go up against his compadres Mia & Ralph who were Hell bent, on killing LIAT.
      The success or failure will no do, be attributed to his legacy.

      Now, I hope he’ll be as “tactful” when it comes to the festering saga at the Customs, in regards to his alleged forged signature!
      So, the LIAT celebration might be short lived, and especially with Asot Michael – MP, sniffing at his tail.

  4. Anyone notice that apart from bullying the LIAT staff into take a 50% cut, there is no mention by PM Browne of the payment of severance whether all, or 50% or 30%, and where the money is coming from to pay this severance? Anybody for CALVINAIR upgrading from helicopter at Fort to jets at VC Bird?

    • What seems crystal clear in this situation is that 50%, 30% or 100% of nothing is nothing. To be fair I don’t see any evidence of bullying. It appears to be a fact that LIAT has NO money to be paying anybody anything. I would imagine that for LIAT to even have a chance of a “come-back” the taxes will have to be reduced (considerably). Staff reduced to hopefully those whose mindset is NOT “I won’t do anything beyond what I think I am being paid for, so no going the extra mile for me”. Qualified/experienced manager/s and elimination of the politics and freebees within the company. That’s just what is obvious to lay people looking in. I can only imagine that there are a multitude of inefficiencies, money wasting and over employment and not least of all trying to function as a profitable business with a very staff friendly labour code. IMO businesses are established to make a profit. If an overly stringent labour code cripples that profit then the business will fail and ultimately the staff will lose.

  5. I won’t call it Bullying the stàff of Liat to take a 50 percent cut. I work in Corporate overseas I’ve been in these types of meeting too many times. It’s all about the numbers . Trim waste, creditors,projection and profitability. Guys at the top don’t get up there by being a nice guy . You get there by making tough n hard decisions.I am not a Gaston kisser as some on here call each I’m Antigua but live overseas .I believe this gentleman is very knowledgeable about what he wants n where Liat 2020 needs to be

    • As the saying goes, its better to have one bird in your hand than two in the bush. Workers can chose which one they want. I have said it before, Half Moon Bay workers still waiting for severance. Stanford Development workers just got paid after eleven years. And their are many more that have not seen a dime of severance for many years. If LIAT liquidates what is the likelihood of staff getting their severance? Zero!. So let the union talk non-sense in their head. It’s better to take some shares instead.

  6. Good to see alternative plan being explored.Hopefully with eyes wide open.

    CDB preferred creditor so all loans & charges must be paid. Apparently shareholder govts. are assuming this debt on the understanding that the 3 owned planes can be sold for reasonable return in this Covid-19 airspace where globally the majority of airlines are divesting planes.

    Are there any other preferred creditors? What $ amount?

    A&B gains Barbados & SVG shares for ec$2. Does this mean Bim & SVG walk away from all severance payments, ticket holders repayments, breaking aircraft lease penalties & creditors?
    If so, note PM is ‘slashing’ what is owed to these folks (if creditors & staff accept it).

    Administrator: memory says PKF or BDO were hugely overdue in delivering accounts for an entity a couple of years back & govt. kept excusing their performance & giving extensions. The public didn’t see the final reckoning. Surely not the track record needed for this exercise, which we are told is to be undertaken in ‘weeks’ – is that even possible using best practice accounting & law?

    IF administrator cannot deliver a viable plan and PM cannot deliver viable transparent financing for debt, operational costs & airplane lease payments then A&B (& maybe a small % from Dominica) assume all debt, in any form.
    Where the money coming from? Or is plan at that stage for bankruptcy/winding-up Liat 1974 and no payments?
    Liat 2020 starts with a clean sheet!!

    Remember govt. still have to pay civil service, provide reliable electricity, running water, internet to the whole island, maintain & operate health service, education services, agricultural development, law & order, roads, waste disposal, gender affairs and critically hurricane support amongst other societal needs.
    Interesting times.

  7. …a which part, fu U chuch dey?
    U a preach to Rass!
    In the Valley of the shadow of death!
    It’s good, that the PM has the fortitude, to go up against his compadres Mia & Ralph who were Hell bent, on killing LIAT.
    The success or failure will no do, be attributed to his legacy.

    Now, I hope he’ll be as “tactful” when it comes to the festering saga at the Customs, in regards to his alleged forged signature!
    So, the LIAT celebration might be short lived, and especially with Asot Michael – MP, sniffing at his tail.

    • @Chuck…I don’t know about being, “right!” I am simply observing, From The Sidelines, and enjoying the show!

  8. Another failed experiment. Antiguans have champagne taste with mauby pocket. I can see the top dawg on his knees with our news colonizers the Chinese and the new Allen Stanford begging them. Saying this will save my government with me In office you can take Antigua and Barbuda. Country for sale bring the Jumby money.

  9. Anyone interested in buying my shares for a $1.00 and taking on my debt of roughly 60 million! Please let me know. There is a sucker born every minute. Booking refunds are due, lease payments, fuel hedge payments, landing fees, parking fees, severance payments, salaries, money’s own to vendors…the financial gymnastics that is being choreographed by the Bandit has caused Dominica’s PM to pump his brakes. The plan needs fine tuning. LIAT is a failed enterprise. Let the private sector do what they do best. Make money! Government is there to provide a sustainable environment for the masses to flourish. To pursue the joys of life, provide the necessities for a community’s to flourish. Not deal with a failing enterprise. Use your resources to provide safe drinking water, air an sea ports, surfaced roads, sanitation, safe communities, sustainable employment. Those are some of the responsibilities of good governance. Not putting the the government in some financial scheme that would bankruptcy. Don’t forget. They just enacted the law! As I was told many times growing up. You Mek you bed. You lye down in a um!

  10. To quote the article: “I believe there will be a shortfall of about US$45 million, which will be shared proportionally by the shareholder governments”.

    Also to quote the article: “the aggregate shares that would be transferred to Antigua and Barbuda would be around 60 per cent between the two governments”

    Am I to understand then that in effect Antigua will then be liable for its own share of the $45 Million debt in addition to an additional 60% ($27Million) thereof?

    • You know what you guys miss. That kind of money is small change for the collective government. They may be cash strapped presently but that will not be forever. And less we forget. The UPP bought a generator from China that cost us US$50million and we never got the benefit of this plant, but we re still paying back for it. And it will take us many years to clear that debt.

      • …and, don’t forget, the 90 plus percent cost overrun, on the new airport under the tenure of the UPP.
        I am still, of the opinion, that a forensic audit is done on the entire New Airport project!

    • @Dadian
      When a company folds, the shareholders are not responsible for the company’s debt unless they have put up personal guarantees. The creditors are usually paid first from the sale of the assets and in the case of Liat could be cents on the dollar as I am sure Liat has more debt than assets. The shareholders would receive what is left after the creditors are paid and in liat’s case, nothing. Antigua would not be responsible for other shareholders debt. I am sure Gaston has legal and financial advisors and if he doesn’t he should get some and take their advise.

  11. I expected this type of reaction from those traitors who were hoping to have their celebration party after Monday night’s show down meeting. You doom and gloom peddlars grow uglier by the minute. Your spite and hatred for an esteemed, brilliant, true son of the soil is so obvious in your trite and hollow words. True Antiguans have faced adversity before. But guided by God Almighty, steeped in the spirit of our African ancestors, strengthened by the tenacity of our widdy-widdy forebears and motivated by the ambition of the Father of the Nation, Sir Vere Cornwall Bird, we will not only survive but we will thrive. Our airport is now reopened. Feel free to leave and not come back.

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