Air Canada seeks reprieve from creditors
April 7, 2004
Montreal - Air Canada is likely to seek a 30 day extension of its bankruptcy protection from creditors as it works to finalise its restructuring, which has been put in jeopardy following a U-turn by a Hong Kong-based tycoon.
The carrier is now likely to seek bankruptcy protection until May 14, according to court documents.
Auditor Ernst and Young, which has been authorised by an Ontario court to oversee Air Canada's restructuring, recommended such a course of action in a report presented to the court on Tuesday.
Air Canada is searching for a new financial saviour after Hong Kong-based Victor Li signalled he was ditching a potential rescue bid following unsuccessful negotiations with unions over retirement programs.
The delay is necessary for Air Canada "to stablize its restructuring efforts, (and) to develop a detailed process for soliciting new equity or other post-emergence financing," Ernst and Young said.
Carrying debts of over 12 billion Canadian dollars (R58 billion), Air Canada was placed under bankruptcy protection by the courts on April 1.
Company executives nonetheless remain upbeat that fresh investors will step forward, despite Victor Li's planned withdrawl.
"Given the intensity of the interest that we saw in Air Canada at the end of last year, I'm confident there will be other investors," Air Canada chief executive Robert Milton told CBC television.
Milton said he hoped that Li would reconsider his decision.
"I'm still hopefull Victor Li is the man because I think he is a long-term investor who believes in the prospects of the aviation industry, and Air Canada is a great platform," Milton added. - AFP
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