The founder and CEO of Western Global Airlines (KD, Fort Myers Southwest Florida) has acquired USD115 million of senior secured debt in the distressed airline at USD0.40 on the dollar, raising eyebrows among employees (who own almost 40% of the entity) and other creditors.
As reported by Bloomberg, CEO Jim Neff purchased the discounted debt last week in a bid to ward off insolvency. The seller was Truist Financial Group, a North Carolina-headquartered bank holding Western Global's first-lien term loan and revolving credit line. Late last month, ch-aviation reported that Western Global was in talks with creditors, with Chapter 11 bankruptcy considered a live option.
In 2020, Western Global issued USD400 million worth of junk-grade bonds, resulting in a hefty payday for Neff after he sold the bulk to his employees. Those employees are now reportedly questioning the validity of last week's transaction that puts the CEO at the head of any repayment queue in the event Western Global does fold.
Relations between Neff and his workforce were fractious before the current financial concerns, a result of cooling global cargo demand. Neff sold down his stake in 2020 in a bid to prevent his workforce unionising. However, some employees, notably pilots, unionised anyway, and Western Global later faced a lawsuit claiming it had overvalued the shares it sold to employees. Western Global vigorously denied that allegation.
Operating since 2013, Western Global's clients have included JAL - Japan Airlines Cargo, United Parcel Service, ANA - All Nippon Airways, ANA Cargo, FedEx, DHL Express, and United States Postal Service. The airline, which retains a fleet of 20 aircraft, claims it has "redefined" the air cargo market by offering clients variable and flexible capacity at a lower cost than competitors. Neff, whose CV includes stints at Emery Air Freight, Flying Tigers, and Burlington Air Express, describes himself as "one of the most transformative visionaries in modern air cargo," adding that Western Global Airlines is his "masterpiece."