Monarch: paper profits and discounts as capital for the super rich
Monarch Airlines is bust. And in the Sunday Times we get an insight into the bizarro world of the mega-mega-rich. Monarch is owned by private equity outfit Greybull.
Amid a battle for orders between Boeing and Airbus, Monarch secured a cut-price deal for 30 new planes — which later rose to 45. The market value of the aircraft was greater than Monarch’s agreed price, so creating a paper profit.
And then it got even better.
Greybull was able to persuade Boeing to release more than £100m of this trapped equity as cash, pumping it into the airline through Petrol Jersey.
Can it be that the seller gave discount as capital?
And why now did the firm bust? The Times notes:
Questions have been raised about timing. Monarch went down with £48m of cash in the bank, over which Greybull has a strong claim as primary secured creditor. Swaffield’s statement revealed that the cash pile was shrinking rapidly and would have been £20m by the end of the month. Greybull’s Marc Meyohas said the timing of the collapse “was influenced by Atol, not by us running out of cash”.
Fair enough?
“The families, Greybull, Petrol Jersey, however you want to put it, will have lost money on this deal,” said Marc Meyohas. “We are absolutely disappointed by the outcome. We do feel we have been responsible owners, but we have failed nonetheless.”
As for placing questions marks over the owners, well, is it fair to portray them as grinners, as the FT does?
Expect a lot to follow – little of which will help the poor sods now out of jobs and fretting about pensions.
Spotter: Times
Posted: 8th, October 2017 | In: Broadsheets, Money Comment | TrackBack | Permalink
