Sterling Airlines A/S will file for bankruptcy today after its Icelandic owner ran out of money to support the business and after the company was unable to find an investor or buyer for its assets.
``Negotiations have been conducted with several potential investors, but it was impossible to make ends meet,'' the company said in a statement on its Web site today. ``Sterling Airlines has no option but to file for bankruptcy.''
Sterling's owner Palmi Haraldsson had sought to find a partner for the airline, after rising fuel costs and less demand reduced the company's profitability. Haraldsson's plans to inject enough capital in the company until 2009 were undermined by the collapse of the Icelandic financial system, Sterling said. Iceland on Oct. 24 got a $2.1 billion loan from the International Monetary Fund.
``Over a three- to four-week period, the whole financial system melted down, and that resulted in our shareholder being unable to continue his support to the company,'' Sterling said.
Sterling customers who bought their tickets on its Web site won't be refunded, according to the statement. Sterling is advising customers who bought tickets by credit card to contact the credit card issuer or bank, while people who bought tickets through travel agents should contact them, the company said.
Alitalia Bidding Group Approves EU1.1 Billion Capital Increase
CAI, the group of Italian investors bidding for Alitalia SpA, approved a 1.1 billion-euro ($1.37 billion) capital increase to help finance its offer for the airline.
CAI shareholders, led by Piaggio & C. SpA Chairman Roberto Colaninno, approved a sale of new shares to investors at a meeting yesterday in Milan, according to a statement. The shareholders, including Atlantia SpA, also chose a board, which will present a binding offer for Alitalia's assets Oct. 31, according to the CAI statement.
CAI offered to buy Alitalia's flight operations on Sept. 3 as part of Prime Minister Silvio Berlusconi's bailout of the Rome-based carrier. The group plans to merge the airline's flight operations with domestic competitor Air One SpA, while Alitalia's administrator will sell or liquidate other unprofitable assets.
The offer is conditional on final approval from labor unions of the deal's terms and a favorable decision by the European Commission, CAI said in the statement.
Alitalia's nine labor unions last month agreed to CAI's takeover offer, which includes about 3,000 job cuts and calls for longer work hours at unchanged pay.
C& Group May Pass Control to Creditors on Liquidity Problem
C&Heavy Industries Co., a South Korean shipbuilder, and its affiliates including C&Merchant Marine Co. are considering sharing management control with their creditors because of funding problems.
C&Heavy said in a regulatory filing today it reviewed a plan to give joint control to creditor banks to overcome a ``liquidity crisis.'' The Mokpo, South Korea-based company said no decision has been made.
C&Merchant Marine, C&Woobang Construction Co., C&Woobang Land Co. and Jindo F& Co., part of the C& Group, also said they are considering giving control to creditors. The companies said they plan to disclose details to the stock exchange when a decision is made.
C& Group controls 41 companies and had about $2.3 billion in assets and $2 billion in revenue in 2006, according to the group's Web site.
Woori Bank offered 227.4 billion won ($159 million) of loans to C& Group units, of which 163.5 billion won was secured, the Seoul-based bank said today in a separate statement. Woori said C& Group didn't apply for a banks-led debt-management program.
Deloitte & Touche Appointed to Deal With Kaupthing Creditors
Deloitte & Touche LLP was appointed to negotiate with the remaining creditors of Iceland's Kaupthing Bank hf, once the nation's largest lender.
Deloitte will also deal with creditors of Kaupthing's international branches, the Reykjavik-based bank said in a statement yesterday.
Iceland seized control of Kaupthing on Oct. 9, completing the takeover of a banking industry that collapsed under the weight of foreign debt. Iceland will guarantee Kaupthing's domestic deposits, the country's Financial Supervisory Authority said at that time.
FerroChina Says Units Face Legal Claims for 4.48 Billion Yuan
FerroChina Ltd., a Chinese steelmaker unable to pay its loans, said suppliers and other creditors started legal action to claim 4.48 billion yuan ($655 million) of debt.
Six of the company's units face a total of 169 lawsuits in China, FerroChina said today in a statement to the Singapore Stock Exchange, where its shares have been suspended since Oct. 8. The company said it remains in talks with creditors and ``a few potential investors'' on a possible debt restructuring.
The steelmaker earlier this month blamed the ``economic crisis'' for not being able to pay 706 million yuan in loans, and said a further 4.52 billion yuan in loans and notes may also be at risk. Steel prices in China have fallen on slowing demand.
``What's gotten me uncomfortable is why the management didn't disclose this problem of not being able to meet cash flow earlier on during numerous company visits by analysts and fund managers,'' said Lawrence Lye, an analyst at CIMB-GK Securities Pte. ``They did nothing to tell anybody.''
Most of FerroChina's suppliers and creditors have also gotten court orders to freeze the assets of the six company units, including bank accounts and properties, the statement said, naming neither the companies that have taken the legal action nor the courts where the cases were filed. FerroChina is based in Changshu City, Jiangsu province.
The stock last traded on Oct. 7 at 54.5 Singapore cents, valuing the company at S$436 million ($295 million). The shares have fallen 80 percent in the past year.
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