Integral, ANA agree joint sponsorship of Japan's Skymark

The agreement comes three months after Skymark - Japan's third-largest airline - filed for bankruptcy protection and subsequently delisted from the Tokyo Stock Exchange. At the time it was revealed Integral would help refinance the company but no further details were given.

Under the terms of the recently announced agreement, Integral will hold just over 50% of company, while ANA - the parent company of All Nippon Airways - will take up to 19.9%. Other entities will hold the remainder.

The capital contribution by other investors will be decided upon once a rehabilitation plan is submitted, the companies said. However, according to the Yomiuri Shimbun, Sumitomo Mitsui Banking Corp and the Development Bank of Japan are likely to participate. ANA is understood to want to keep its stake below 20% so it will not be forced by regulators to give up any of its landing rights at Haneda airport.

New executives will be appointed to the Skymark board, including a chairman and a president. Integral will appoint three of the six executives, while ANA will appoint one. The remaining two will be decided at a later date.

Skymark was set up in 1996 and was the last remaining Japanese airline to operate independently of either JAL or ANA. The company had previously done well, mostly due to its ability to undercut industry incumbents by employing a fleet of smaller fuel-efficient jets and offering a stripped-down in-flight service.

Its move to expand internationally and compete with bigger rivals, however, proved to be its undoing. In 2011, Skymark ordered six Airbus A380s for JPY191.5 billion - more than twice its annual revenue for the 2011 financial year. However, 2012 saw the arrival of other budget competitors such as Peach Aviation, an ANA-controlled joint venture, and Jetstar, which is controlled by JAL and Australia's Quantas.

The weakening yen further exacerbated the situation and Skymark, which recorded its first loss in 2013, struggled to meet the down payment for the new A380 fleet. Airbus revoked its $2 billion contract in July and subsequently filed a lawsuit over the unpaid deposits.

Integral typically focuses on buyout and PIPE deals. It is currently investing out of its second fund, which reached a final close in November of last year at JPY44.2 billion. The fund counts the state-backed Organization for Small & Medium Enterprises and Regional Innovation (SMRJ) among its LPs.

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• Topics
• North Asia
• Buyouts
• Credit/Special Situations
• Infrastructure
• Japan
• buyout
• Distress
• Integral Corp.
• Infrastructure
• Transportation