Nordica to pursue Adria loan
Estonia's national carrier Nordica says it still plans to claim back a 7.8 million euro loan it made to Adria Airways, which has since depreciated, but gave no timeframe when it would seek repayments, noting it was "no secret" the Slovenian carrier is having financial problems. Nordica, which was set up in late 2015 with the assistance of Adria, ended its partnership with the airline in November 2016 by giving it a 7.8 million euro loan at a contractual interest rate of 15%. For a year following the foundation of Nordica as the successor to bankrupt Estonian Air, Adria was the carrier's most important partner, providing it with a booking system, as well as operational services and staff training.
Upon the completion of the partnership in 2016, a part of Nordica’s liquid assets in Adria were converted into a loan as agreed by both sides. The result was a debt by Adria to Nordica in the form of cash debt converted into a loan. The loan period is six years, however, the Estonian carrier has constantly depreciated its value, which has raised eyebrows with auditors. PricewaterhouseCoopers, which has come under fire over its auditing of Adria's 2018 financial report, has reviewed Nordica's reports in the past, noting that the loan does not corresponded to good financial practice. It said there was insufficient proof of similar interest rates on the market, and hence they hadn’t been able to find sufficient evidence to assess the likelihood of Adria ever paying back the loan.
The Chief Financial Officer of the Nordica Aviation Group, Kristi Ojakaar, told the Estonian daily "Postimees" the company would pursue loan repayments. "We devalued the loan since the probability of a full repayment was small, primarily because of Adria's difficult financial situation, which is no secret. Of course, this is not a gift. Adria paid off part of the debt last year, some 800.000 euros. We will actively continue to engage in claiming the debt", Ms Ojakaar said, but gave no details on the amount that is still owed. Nordica registered a net loss of 5.4 million euros last year, while Adria is expected to post one of its biggest losses to date. The cooperation agreement between Adria and Nordica was expected to last until at least the end of 2017, however, in 2016 the Estonian airline opted to ink a similar deal with LOT Polish Airlines and end its arrangement with Adria.
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