CHEYENNE – Wyoming’s only airline could face immediate seizure “of substantially all” its assets after defaulting on a $27.5 million loan it only secured in December.
In a federal filing, Great Lakes Aviation officials said the company had defaulted on its loan, opening the door to its lender to collect all $27.5 million lent the struggling company, even if that comes in the form of assets. While it is unclear what lender Callidus Capital Corp. will do, the default pushes Great Lakes interest rates from 14 percent to 17 percent.
Earlier this month, the chief financial officer of Great Lakes aviation, Michael Matthews, flew the coop shortly after the default occurred, causing an executive shakeup. Matthews left the company with a cushy severance and consulting agreement that nets him $12,500 per month over the next 10 months. The company hired Stan Gadek, formerly the president and chief executive officer of Minnesota-based Sun Country Airlines, to occupy Matthews’ former role. Gadek didn’t immediately return a request for comment, and Matthews had been unresponsive to Business Report requests long before his final departure.
The $27.5 million loan came about in the eleventh hour to be able to pay off loans from other lenders before the company had to resort to even more drastic measures to stay aloft.
In its most recent quarterly report, company officials said the pilot shortage has been worse than expected, forcing the company to close off legs to many airports like Sheridan County Airport, which has been without passenger service since March 31.
Great Lakes also admitted it doesn’t think it will be able to comply with its loan requirements throughout the rest of 2015, calling to question further the solvency of the company.
The company said it is working through the issues, exploring possibilities ranging from debt and equity financing to selling its aircraft and leasing them back.
“The company cannot make assurances that its assets or cash flow from operations will be sufficient to repay borrowings under its existing debt obligations,” the company’s management said in federal documentation.
The doubts are large enough to cast a stormy shadow over the entire company’s ability to stay in flight, and Great Lakes itself questions its ability “to continue as a going concern,” or a business that can operate indefinitely.
Wyoming Business Report
SkyGreece Airlines has filed for creditor protection in Canada, a week after halting operations and standing hundreds of passengers.
Lawyers for the Toronto-based company notified the Canadian Transportation Agency on Thursday that it plans to make a proposal to creditors under the Business and Insolvency Act.
It says the court-supervised restructuring proceedings “will ensure that, over the long term, all stakeholders, including passengers, are treated equitably and receive fair compensation for their claims.”
The move stays agency proceedings against the company resulting from a claim filed by passenger rights advocate Gabor Lukacs.
Lukacs has been seeking an order to protect and compensate stranded passengers, which ceased operations Aug. 27 after more than a week of disrupted service.
“This was totally expected,” he said of Thursday’s court filing, adding that it reinforces his belief that the agency didn’t move quickly enough to protect passengers.
Lukacs said he’s concerned about how much of their paid fares will be reimbursed under the court process.
The Halifax resident had called on the agency to order SkyGreece to rebook its stranded passengers on other airlines and put up $8.7-million in security to cover passenger claims.
Ernst & Young has been named as monitor, which will communicate with creditors and customers of SkyGreece, which was founded in 2012 and started operations in 2014 with one plane, which has been parked at Toronto’s Pearson International Airport.
The Globe and Mail