JAL Lenders Agree to Alomst 90% Debt Waiver

Efforts to save Japan Airlines Corp. have been boosted by an agreement between the airline and its banks on huge debt waivers.

According to sources, the rehabilitation plan for the bankrupt airline centers on getting the banks to write off about 520 billion yen ($5.95 billion) in loans. An additional 350 billion yen in public funds is expected to be plowed into the company.

JAL and the Enterprise Turnaround Initiative Corp., which is overseeing the rehabilitation plan, initially asked the airline's main banks to forgive 90 percent of the money owed them.

The banks resisted, saying they were being asked to shoulder a disproportionate burden. They pointed out that fuel charges owed to other businesses were fully protected when JAL went bankrupt in January, because of the need to keep planes flying.

The two sides appear to have reached agreement last week on a slightly reduced waiver, amounting to 87.5 percent of the loans. This lightens the banks' burden by about 20 billion yen.

With the compromise in place, JAL and the enterprise turnaround corporation now expect to submit a rehabilitation plan to the Tokyo District Court in late August.

Japan Airlines was 950 billion yen in debt at the end of March 2010, the result of sagging passenger numbers and a large fleet of outdated, fuel-guzzling and inefficient aircraft such as the Boeing 747.

JAL and the enterprise turnaround corporation hope to get JAL out of the red by the end of the current fiscal year.

http://www.asahi.com/english/TKY201007250281.html

Blackstone "reduces, refinances or extends" more $52bn of debt

The Blackstone Group has “reduced, refinanced or extended” more than $52 billion of portfolio debt since the beginning of 2009, Steve Schwarzman, the firm’s chief executive officer, said during an earnings call. The figures quotes pertained to the company’s holdings across multiple strategies and asset classes.

As an example, the firm bought back debt at a discount in its portfolio company Michaels Stores and sold it for more than six times original cost, Schwarzman said.

“Another driver in some of our valuations over the last 12 months has been the ability to extinguish debt at a discount and take advantage of some of the dislocation of the credit markets to create value,” Blackstone’s president Tony James said during the call.

Earlier this year, Blackstone was able to shave off $4 billion of debt on its Hilton hotels portfolio company and push back debt maturities by two years to 2015.

Private equity firms have been working to control debt loads in the portfolios. Standard & Poor’s estimated earlier this year that about $140 billion of leveraged buyout-related loans will come due in 2014. Close to $80 billion will mature in 2013 and about $25 billion in 2015.

A number of private equity firms have had success refinancing portfolio company debt, but some critics say the moves are only temporary measures and the companies that have been through refinancings have only bought themselves more time to deal with their debt burdens.

Moody’s Investors Service reported earlier this week that casino giant Harrah’s still has a debt problem, despite refinancings, and will need to go public, sell assets or restructure. The company, bought by TPG and Apollo Global Management in 2008 for $27 billion, makes about $1.8 billion a year in interest payments.

http://www.perenews.com/article.aspx?article=54882