Lloyds rescued HBOS during financial crisis

Dhaka,  Wed,  23 August 2017
Published : 18 Jun 2017, 13:46:19
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Lloyds rescued HBOS during financial crisis

Lloyds rescued HBOS during financial crisis
After rescuing HBOS during the financial crisis, Lloyds became the main creditor of Corporate Jet Services, a private jet chartering company that collapsed in 2007, according to a global media report Sunday.

At the time it went under, CJS owed £113 million to HBOS in highly controversial circumstances.

Lloyds then accepted the sale of CJS’s prime asset, a German aerospace subsidiary called 328 Support Services.

The business was sold for £5 million in July 2011 to Quest Aviation Services, a company owned by former CJS directors - a substantial discount to the $47.5 million (£27 million) CJS agreed to pay to acquire 328 and well below the £23 million fair value listed in the company’s accounts.

The price achieved by the receivers, PwC, valued 328 at just over one times operating profit in the year of the sale, according to accounts filed at Companies House. But when Quest sold 328 on to a US aerospace company, the same former directors are likely to have made millions of pounds.

Internal HBOS documents indicate the potential value of the business at that time. In March 2007, just before its insolvency, CJS received an approach from Sobha, an Indian company, that indicatively valued 328 at $75 million.

After the 2011 deal Quest held on to 328 for just over three years. In 2015, it sold 328 on to Sierra Nevada Corporation, a private US aerospace company, for an undisclosed sum.

According to a Quest memorandum from 2008, a quarter of its shares were owned by David Mills, a financier jailed this year for his central role in the so-called Reading fraud, which may have cost Lloyds more than £1.0 billion.

- SZ
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