Texas Pacific Group, the investment vehicle of Mr David Bonderman, is set to become the biggest shareholder in Irish aviation group GPA. Sufficient numbers of GPA's long-suffering shareholders have accepted Mr Bonderman's offer to buy their shares for $1.56 (about £1) each to give him a 47.7 per cent stake in the company.
Major shareholders such as Aer Lingus, Air Canada and Prudential Life of America are understood to have agreed to sell all or part of their GPA shareholding to Mr Bonderman. Depending on the total number of shares tendered for, the deal could realise up to £10 million for Aer Lingus. GPA founder Dr Tony Ryan, who has a 7 per cent shareholding in GPA, is understood to be retaining his interest and will remain one of the major shareholders in the newly restructured group.
Texas Pacific had agreed to tender for 60.9 million GPA shares for $115 million (£77 million) and subscribe for an additional 12.8 million new shares. GPA announced yesterday that the tender had been slightly oversubscribed, with qualifying shareholders tendering a total of 66 million shares.
As a result, the tender will be scaled back, with shareholders ending up with 96.88 per cent of the total value of the shares tendered for sale. Mr Bonderman's offer to pay $1.56 per share is substantially better than the 60 cents a share which GE Capital must pay if it exercises its option of 24.9 per cent of the group in 2001.
GE Capital had earlier agreed to reduce its interest in GPA to these levels, having secured a substantial hold over the company as part of the rescue package to bail out the financially troubled group in 1993. GPA will finalise the details of the share purchase over the next couple of weeks and hopes to be in a position to post cheques to shareholders on November 20th.
For many, the cheques will mark the end of a difficult chapter and will help them realise a value for their shares which most had largely written off.
GPA chief executive Mr Patrick Blaney said a lot of the older institutional investors, which had taken shares in the 1980s, had taken advantage of deal, selling all or part of their total holding.
After the sale, Mr Bonderman's investment group will have the single biggest stake in GPA, followed by staff and management, who own a combined 15 per cent stake, and Dr Ryan. Texas Pacific is a private investment partnership established by Mr Bonderman, who is also chairman of Ryanair. Based at Fort Worth, Texas, it specialises in significant private equity investments across a range of industries and has substantial investments in the US Continental and America West airlines.
On completion of the deal, Mr Bonderman, together with two other executives from Texas Pacific, will join the board of GPA. The group will then trade as AerFi.
Commenting on the deal, Mr Blaney said he was pleased with the take-up from shareholders. "We are also very pleased to have a very big, powerful shareholder to help us to develop in the future." Under the terms of the complex agreement, Mr Bonderman is precluded from increasing his stake in GPA for a period of two years. Mr Blaney stated that no exit mechanism had yet been agreed.
"We will be looking at developing an exit mechanism at the earliest opportunity," he said. Options in this regard would include a flotation of the group on the Irish or international stock markets.
Mr Blaney said GPA would concentrate in the short term on making its profitability more stable. "We will be going about that in a prudent, low-key fashion."
