Takeover of USIT by investors' group set to go ahead
A deal for the takeover of USIT by a group of investors looks set to go ahead, a number of sources said last night. Negotiations aimed at finalising a deal were continuing as the examiner to a number of USIT companies, Mr David Hughes, prepared to return to the High Court today.
Mr Hughes will seek the court's approval for a scheme of arrangement he wants to put in place following the collapse of the USIT group earlier this year. The scheme is understood to involve one group of creditors getting 3.5 cent per euro with another getting 15 cent per euro.
The investors, who seem set to take over the two USIT companies which run the group's operation in the Republic, are understood to have agreed to terms sought by Aer Lingus.
The airline wanted to give guarantees regarding the supply of its tickets for only one year as against the five-year term originally sought by the investors. The failure to get such an agreement from the national airline led to the withdrawal of Ms Gillian Bowler and her husband, Mr Harry Sydner, from the consortium.
Aer Lingus is also understood to have been successful in seeking a commitment that an entirely new board would run the companies following the consortium's takeover. The investors are understood to be putting more than €2 million into the USIT companies.
The companies are USIT Ireland Ltd, which trades as USIT Now, and an associated technology and systems company, USIT World.com.
The investors are Dublin finance house Ion Equity and two as-yet-un-named property investors. One source said the property investors had a track record of investing in companies as well as property. The USIT organisation here is believed to own a number of properties.
Sources said the negotiations to secure a deal had been going well and all the signs at the moment are positive. The USIT operation in the Republic is said to have been trading very well since the appointment of the examiner.
USIT Now runs a visa work programme for students to the US, which involves the sale of a considerable number of transatlantic tickets with Aer Lingus. The airline is the largest supplier to USIT Now and was concerned about getting involved in a lengthy guaranteed arrangement with the company. Ms Bowler was of the view that a five-year deal was needed with Aer Lingus.
Aer Lingus has agreed the guaranteed supply of tickets to the new investors until the end of 2003, with supply being reviewed at that time. The airline is owed something in the region of €1 million from USIT Ireland and could have lost more if the group had gone into receivership at another time of the year.
If the High Court approves the scheme proposed by Mr Hughes, it may also set a date for the investors to take over the two USIT companies. The scheme is understood to involve creditors of USIT World.com getting 3.5 cent per euro over a period of six months and creditors of USIT Ireland getting 15 cent per euro over the same period. USIT Ltd, a Northern Ireland company, is owed €50 million by USIT World.com.
USIT Ireland and USIT World.com are all that is left of the group headed by Mr Gordon Colleary which had a turnover of $600 million (€637 million) last year. The parent company, USIT World, was put into liquidation last month. All the other subsidiaries have been sold or put into liquidation.
Many of these were taken over by USIT's former rival, STA. After STA took over USIT World in February it put the firm into receivership. The subsidiary operations were put up for sale and STA was interested in buying the Irish ones. Then the consortium involving Ion began negotiations with Mr Hughes. These led to STA being replaced as the likely purchaser.