Break-up 'would leave Aer Rianta in default'

The Government's plan to break-up Aer Rianta will leave the company in default of its loans, the Labour leader, Mr Pat Rabbitte, claimed in the Dail this evening.

Mr Rabbitte said in the opinion of the company's legal advisers, the restructuring would constitute "an event of default" entitling the banks and bond holders to demand immediate repayment of loans.

He said the legal advice stated the bank's terms did not permit Aer Rianta "to cease to carry on any substantial part of its business" or "to cease ownership of its operations in Cork or Shannon".

The advice concluded that the provisions in the Minister for Transport's State Airports Bill , which will pave the way for  the break-up of Aer Rianta, were "problematic", he claimed.

Mr Rabbitte said it appeared that waivers would be required from lenders to avoid default arising from the proposed restructuring of Aer Rianta . He said the legal advice had warned that creditors "may baulk" at issuing such waivers preferring instead to adopt "a wait-and-see approach".

He asked the Taoiseach if he or the Minister for Transport had been in contact with any of the company's lenders to seek such waivers.

Mr Ahern said "the maintenance of good relations" between Aer Rianta and all of its funders was a fundamental part of the Government's restructuring process. He said the fundamental relations between the company and its creditors were being handled in a "professional and business-like manner".

"While the handling of this important matter of the restructuring process was matter for the company", he claimed both the Department of Transport and the Department of Finance were involved.