Slz396 From , joined Dec 1969, posts, RR: Posted (11 years 4 months 1 week 1 day 9 hours ago) and read 833 times:
On Monday afternoon, the 14th of January 2002, the 2 chairmen of Air Holding NV/SA, planning to take over Sabena's subsidiary DAT on request of the Belgian government in an effort to create a new Belgian flagcarrier, gave what they caled a final press conference to tell the public that all 53 SIC creditors should now within 24 hours make up their mind about whether or not they'd accept the Lippens-Davignon plan on SIC and thus DAT/New Sabena.
The plan basically involves that DAT is cleared from all its depts (109 million euro) with Sabena's internal bank SIC. The SIC depts towards DAT however would be paid as planned, meening that DAT would receive 50 million euro of cash. As SIC is virtually bankrupt but no longer court protected, all creditors have to agree to this cash transfer, if not the Lippens-Davignon plan with DAT can not go ahead as the 50 million euro from SIC are undispensable in their plan.
For the SIC creditors the problem was not so much that they have to remit 59 milion euro uncovered dept (widely considered as lost), but that they'd also have to refrein from taking what is left in SIC (i.e. 50 million euro) only in return for shares in the new airline.
As a consequence of the press conference a few hours earlier, 53 representatives met in the Rue de Brederode in Brussels, were the lawyers of SIC have their offices. The aim was to see whether they could finalize a deal or if the New Sabena project would have to be abandonned all together.
Changes are at that stage 50/50.
The meeting started at around 1800 and quickly it became obvious that the receiver of Sabena was needed to give a good insight in the financial aspects of possible decisions, so Mr. Van Buggenhout arrived at around 1900.
At around 1930 it was clear 51 out of 53 creditors agreed to the plan, but there were 2 problem cases, a Japanees bank and a British public credit insurance company. Both felt they had to give up too much (i.e. a guaranteed immediate pay out of only slightly less then 50% of their depts with the cash SIC still has on the bank) merely in return for shares in a company from which the profitability is not 100% assured.
Negociations continued, but at 2030 it seemed a deadlock had been reached and while pizza's were ordered by phone, Mr Davignon was secretly informed about the problems. He decided to come to the meeting himself and while in the car opened up his highly reputated phone book to put some pressure on the 2 parties refusing to sign a deal.
He first called the Belgian ambassabor to London to ask him to make sure the British credit insurance company accepts the plan which is of high national importance. He then called the Japanees ambassabor to Belgium with the same message. The very good relations between the Imperial Japanees family and the Belgian Royal family did not even briefly need to be mentioned.
At 2130 Mr Davignon arrived at the Rue de Brederode and although some creditors were surprised to see Mr Davignon show up, discussions continued.
At 2145 the representative of the British credit insurance company got a for him highly unexpected phone call from the British ambassabor in Belgium saying that it would be highly appreciated by the government back in London if his company would not block the Belgian plans. The man, not really knowing what is going on here, made a few more phone calls to his head office in the UK and there they told him they had been trying to reach him for the last 15 minutes after his CEO called in to tell that he had changed his attitude towards the SIC plan. As far as this vote is concerned the problem was cleared; a vote would now show 52 out of 53 in favour of the plan. That only left the Japanees to deal with. Negociations continued for many hours and at 0400 Mr Davignon told the Japanees representative the proposals were now to take or to leave. The man said that as far as he is concerned he would leave it although he promised to talk about it to the chairman of his bank first thing in the morning.
Everybody went home to get some sleep and while most of the creditors spent time in bed thinking it was all over, Mr Davignon got a phonecall from the Japanees ambassador to Belgium. His excellency told him he had very good news for the country; although the representative of the Japanees bank did not know it yet, the government in Tokyo had successfully put pressure on the chairman of the bank to accept the plan! By then it was around 0500 in the morning and with 53 votes out of 53 a deal was struck and New Sabena was born!
Ceilidh From , joined Dec 1969, posts, RR: Reply 1, posted (11 years 4 months 1 week 1 day 9 hours ago) and read 781 times:
So basically what you're saying is that these two companies, who clearly felt that the 'New Sabena' is not commercially viable and that any money they put into the company would be lost, had pressure put on them by the Belgian government to ignore the interests of their owners (their shareholders) and in all probability flush their owner's money down the drain?
If it was such a brilliant plan, why didn't Davignon or Lippens personally step in and offer to buy their debts with their own money?
And more interestingly, how many of the other 51 creditors had similar pressure applied? We've already seen confirmed reports of government 'incentives', guarantees, preferential treatment with lucrative government contracts etc together with threats of reprisals if they don't - showing beyond a shadow of a doubt that anyone that invests does not do so because they think it's a viable company.
Anyway, you forgot to mention the loan that they have to pay back by the end of March, so that €50m effectively didn't put a cent in their accounts. Where is the other €500 million that various consultants have said will have to be raised in order to ensure the long term viability of the company coming from - especially when Davignon and Lippens are only looking for rather less than half that?
Slz396 From , joined Dec 1969, posts, RR: Reply 2, posted (11 years 4 months 1 week 1 day 6 hours ago) and read 752 times:
Please note that the pressure did not come from the Belgian government, but in fact from the British, respectively Japanees government! So far as to saying that this application of influence is typical for Belgium only...
I have told you over a month ago (relating to this topic) that although you are probably well aware of how micro-economics work (maybe from your own experience as a small businessman), you apparently do not have the same insight in macro-economic deals, where economical criteria are second to international political issues. You see now that I was totally right when I told you that the rights and rules of a free market economy would simply be ignored when national interests are at stake?
Similar things happen all over the world, hence the influence applied by London and Tokyo on those 2 banks, not to mention the pressure several regional German governments had to put on a 2 German banks. You may claim that it was all on request of the Belgian government, but in the end all people involved (53 mostly foreign top managers of multinationals) signed the deal, so it should be clear to you now that sometimes there are higher things at stake then just an immediate financial gain.
If you can obtain goodwill and influence from your local government for later in return for a favour now, that might be worth a financial loss, you see, even if some of the smaller individual shareholders will loose some money, as in the end it will be a win-win situation for the bigger shareholders.
Slz396 From , joined Dec 1969, posts, RR: Reply 3, posted (11 years 4 months 1 week 1 day 6 hours ago) and read 749 times:
As to the bridging loan which is supposed to be paid back by the end of March, I can assure you: we are working on a perfectly legal yet very interesting solution to both parties involved (i.e. Belgian government and Air Holding).
One thing at a time, please.
Just wait and see.
Flying-Tiger From Germany, joined Aug 1999, 4111 posts, RR: 39 Reply 5, posted (11 years 4 months 1 week 1 day 5 hours ago) and read 724 times:
Well, I really want to see how 53 shareholders can run one company. Are they all allowed to give votes or are they "just" the money bringers? Any news on how DAT is currently performing? Is it true that they will return a number of ARJs/BAe146 soon?
Ceilidh From , joined Dec 1969, posts, RR: Reply 6, posted (11 years 4 months 1 week 1 day 5 hours ago) and read 715 times:
Flying-Tiger - I understand that DAT are losing very serious amounts of money with both low yields and low passenger loads. I have also heard that they have given notice that they will be returning the RJs, and that these will be replaced on many (but not all) routes with A320s.
Interestingly, this is a major problem with VEX who not surprisingly are very unhappy about having to lay off their crews, who are all 737 rated. Indeed, the employees can probably block the VEX deal - though I have no doubts that, as Slz396 says political expedience takes precedence over commercial reality and the interests of the VEX employees will be conveniently ignored.
They will end up with a lot more than 53 shareholders, so I suspect that those ones will simply have the same rights as any other shareholder in a public company.
Ceilidh From , joined Dec 1969, posts, RR: Reply 11, posted (11 years 4 months 1 week 1 day 5 hours ago) and read 685 times:
A330DAT - the British rail system is divided into two parts: Railtrack which has been effectively renationalised with some very dubious practices on the part of the Transport Minister; and the train operators. The operators receive no subsidy (and are broadly equivalent to airlines) whilst Railtrack would be broadly similar to the Air Traffic Control system and - in common with all countries that I know of - is publicly supported.
Alphacentauri From Malaysia, joined Nov 2001, 25 posts, RR: 0 Reply 13, posted (11 years 4 months 1 week 1 day 3 hours ago) and read 672 times:
1) By the way, talking about backroom manoeverings
and downright illegal acts. How do you think big
powerful States for examples, "buy" votes during
International conferences ? Just think about Kyoto,
The Gulf War's international coalition or the
Conference of Donators for South-East Europe, then
let the dead kings sleep well! That's unfortunately
a general practice in our world, but you should not
be aware of that reading your posts...
2) Please, keep the forum clean...
Ceilidh From , joined Dec 1969, posts, RR: Reply 14, posted (11 years 4 months 1 week 1 day 3 hours ago) and read 619 times:
Alphacentauri - just because it's done, does this mean that it's right? Of course not! The problem with corruption - and this is a form of corruption - is that if it as accepted, then it just gets worse and affects more and more areas of life.
Alphacentauri From Malaysia, joined Nov 2001, 25 posts, RR: 0 Reply 16, posted (11 years 4 months 1 week 1 day 2 hours ago) and read 599 times:
You didn't invent "hot water" if you allow me the
expression; sure because it's done, that does
mean that it's right! But posting such general,
elementary comments and moreover targeting Belgians or elements of history is totally pointless regarding the subject, in this way you could point the finger to 3/4
of our blue planet, so ?? Well, you won't change in your
anti-Belgian mentality but that's your own problem....
NB: Do you know that backroom deals and passive
lobbying has existed since the beginning of the
humanity ? From the Roman empire to the EU
Institutions...from aviation business to humanitarian
help....bad or not...
Okay, I'm tired and leaving my computer so don't spoil
your time answering me, it's useless...
Lj From Netherlands, joined Nov 1999, 4143 posts, RR: 1 Reply 18, posted (11 years 4 months 1 week 1 day ago) and read 565 times:
I think I know how DAT will repay the EUR 125mio bridge facility. They change it into a subordinated loan from the Belgian government. Allthough this is not allowed they manage to get EU approval because Mr. Verhofstad himself will go to the EU Commission and say: "Do you want to be responsible of the layoff of 2,600 employees?" At first the EU Commisiion will say that they don't allow it but in the end the Belgians get their way as they just blackmail the EU Commision over something.
Unfortuantely this is the likely scenario. The entire DAT case seems to based on politics instead of economics (oh yes Ceillidh can you for once refrain from commenting on what I've just said as it usually ends in something way off topic)
BTW Slz396, I know a few countries which wouldn't use government pressure to bail out companies. One is called the USA and the other The Netherlands (after Fokker the Dutch government doesn't care anymore about companies going bankrupt).
Gaut From Belgium, joined Dec 2001, 344 posts, RR: 2 Reply 19, posted (11 years 4 months 1 week 23 hours ago) and read 553 times:
According to Rob Kuypers, the new DAT's chairman, the future airline will be neither a new Sabena nor a little Sabena nor an extension of DAT but a new airline C-pax oriented flying to europe. If they have the opportunities they will add some african routes but don't have plan to open US route in a near future (an open door for VG).
Are the low-cost profile of Virgin and the business profil of DAT compatible?, " just like there will not be a new Sabena, in the event of fusion, it will not be a new Virgin", declared Mr. Kuypers