Oct. 11–From 1997 to 2001, former Eastern Airlines president Phil Bakes rolled up 21 package tour operators into a Miami-based holding company called Far & Wide Travel Corp.
On Friday, a federal bankruptcy court began to unroll Far & Wide, approving the sale of five Far & Wide units for $10.3 million.
The price far exceeded expectations, largely due to a $10 million cash offer by a unit of Trafalgar Tours for three of the companies, Swain Australia, Grand European Tours, and African Travel/Lion World.
The bid was more than 10 times the next highest bids for each of the companies, leaving the runner-ups baffled. “We are a little puzzled,” said George Lloyd, principal of Go Ahead Vacations, which has been the emergency operator Grand European Tours.
Patricia Redmond, a bankruptcy lawyer for Trafalgar, which is buying the companies through The Travel Company Ltd. of the British Virgin Islands, said she didn’t know why the bid was so high.
In court, Redmond told U.S. Bankruptcy Judge Robert Mark that her client’s offer “doesn’t compel the purchasers to do anything for consumers,” in Far & Wide’s bankruptcy.
About 15,000 people had deposits on future tours worth $30 million when Far & Wide filed for Chapter 11 protection from creditors on Sept. 24.
However, Bakes said that Trafalgar would make good on tours sold by the units it is acquiring.
“Their plan, as stated to me by Mike Ness, the owner of Trafalgar, was to take care of all of the customers,” Bakes said.
Nearly a dozen tour companies have stepped in to help consumers on tours or about to depart on tours run by Far & Wide. Bakes said help has been extended to travelers representing 62 percent of the $30 million in tour value.
He estimated 60 to 65 percent of Far & Wide customers bought travel with a credit card, which would let most of them charge back those amounts to the credit card processor. But at some tour firms, such as Grand European, over half of the tours were paid by check, Bakes said.
For the near term, Trafalgar’s bid seemed to end the chance that Far & Wide will be abruptly liquidated. The deal is expected to close in seven to 10 days.
Two other companies were sold. Pacific BesTours was re-acquired by its original owner Peter Yeung for $100,000 cash. And High Country Passage went to HCP Acquisitions, owned by David Kendall, for $225,000 cash.
Far & Wide owes nearly $110 million, including $8.5 million to its senior secured creditor Abelco, an affiliate of Cerberus Capital Management, a New York hedge fund.
In second and third position are Wellspring Capital Management, owed $12.2 million, and Fleet National Bank, owed $53.6 million.
Bakes said Far & Wide had renegotiated its debt last year to push most payments off until 2005, but that sales fell from $350 million in 2001 to a projected $175 million this year, leaving it critically short of operating capital when a liquidity crisis arose this summer.
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