GPA finally gets out from under GE Capital's shadow

GPA chief executive, Mr Patrick Blaney, interrupted his family holiday this week to release details of the company's new arrangement with GE Capital. And he insisted that despite the hastily arranged nature of the announcement - he turned up for it in casual attire - it was very much GPA's deal. The days when GE Capital called the tune for the company, it seems, had come to an end.

GPA has long signalled it was keen for GE Capital to make an early decision on whether it intended to exercise its option to buy up to 100 per cent of the company anytime between 1998 and 2001 for $65 million (£46 million). The situation, it claimed, had caused great uncertainty for the company and was constraining its fund-raising efforts and expansion plans.

The granting of that option to GE at the height of GPA's financial woes in 1993 remains a sore point. With its back to the wall, GPA founder Dr Tony Ryan was forced to accede to the giant US corporation's demands when it agreed to buy the company's fleet of aircraft in a fire sale. He later angrily described the experience as tantamount to a "rape" of the company.

Five years on, GPA is in much better shape. An upturn in the aircraft leasing industry over the past three years and a radical restructuring of its financial position, has allowed it to reduce its debts and turn a profit. Mr Blaney and his executives now want to put the past behind them and are confident that the future looks bright. Under the complex deal, GE Capital will receive cash payments and aircraft from GPA to the value of $100 million. It also has agreed to let its original option lapse, replacing it with one which allows it to acquire a "passive" investment of up to 24.9 per cent in GPA at the original option price of $0.06 a share. GPA, in turn, has agreed to drop its trading name. And the deal allows it to raise funds from the sale of aircraft to GE Capital which will be used to make further inroads into its debts. Plans to bring one or two new equity investors on board should also improve liquidity for shareholders.

The new company, which as yet has not been given a name, will emerge as a completely new entity, according to Mr Blaney. It will concentrate on narrow-bodied aircraft, leasing them mainly to tour operators.

The group, he says, will learn from the lessons of 1993, but is clearly glad to have finally got the billion-dollar gorilla of GE Capital off its back.