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Friday, 30 August 2013

Revenge is mine

Over 20 years ago I worked on a deal to fund a Spanish airline, well actually let's not beat about the bush, it was Iberia, and the deal was quite complicated, but it was probably the lowest cost source of funds that the Spaniards could have found anywhere in the world (seriously sub-LIBOR), but it entailed a certain amount of risk.

The downside would be that if the deal was terminated early Iberia would have kept their annual savings to date but would have to refinance under a different structure, probably with the same funders. As it happened I closed the same deal a few months later with an American airline, OK, let's not beat about the bush, it was American Airlines, to fund two MD-11 aircraft for about $146 million, a sweet deal for them and a $2 million fee for us as I recall, but let's not dwell on that.

Back to Iberia.  After several trips to Madrid explaining the deal, faxes (those were the days) of term sheets, mark ups and negotiations between the airline and the investor, a big party of lawyers, arrangers and investors set off for a meeting in Madrid with the airline, and in particular with the fairly recently appointed CFO, Sr Enrique Dupuy De Lômé Chávarri, to finalise terms.

As we are about to start the meeting, Sr Dupuy stood up and said he had read the term sheet and he had decided that while he liked the low cost funding on offer, he wanted the investor to take all the risks. At which point the lawyers, arrangers and investors all stood up, shook hands (they were, if nothing else, polite), walked out and went home. The shortest meeting I have ever attended.

But yesterday, I received notice of an Extraordinary Shareholders Meeting of International Airlines Group (the holding company for BA and Iberia), with five items on the agenda, the fourth being the appointment of the very same Enrique Dupuy De Lômé Chávarri as an executive director of IAG.

Will he get my vote? Dream on, pal.

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