Air Serbia launches debt restructuring talks
Air Serbia has commenced “intensive communication” with special purpose vehicles set-up by Etihad Airways in 2015 called Etihad Airways Partners I BV and Etihad Airways Partners II BV, over the restructuring of its multi million dollar debt. The carrier previously informed the funding vehicle that due to the financial strain caused by the coronavirus Covid-19 pandemic it may not be able to meet its obligations and payments. “Air Serbia has sent its creditors at EAP I BV and EAP II BV a joint proposal with the revised amounts and loan repayment deadlines, in good faith that a mutually acceptable solution can be reached through negotiations. It is important to note that Air Serbia, in relation to the creditors, as well as others such as banks, suppliers and leasing companies, regularly settles all of its obligations to this day”, the company said in a statement.
Air Serbia noted that it continues to enjoy the backing of its shareholders during the ongoing crisis. “The Serbian national carrier has strong support from all sides involved in the adjustment of its business and the further development of the company in these altered market conditions resulting from the Covid-19 pandemic”, it said. Last month, the special purpose vehicle noted, “The Borrower [Air Serbia] has stated its willingness to engage in meaningful discussions to find a mutually acceptable and suitable outcome. The Issuer confirms that payments due under the Debt Obligation Agreement were made by the Borrower on the most recent interest payment date being, on or around, March 19, 2020”.
Five years ago, Air Serbia’s part-owner Etihad embarked on an international roadshow in Abu Dhabi, Dubai and London, supported by lead advisor Goldman Sachs and UAE-based ADS Securities and Anoa Capital by creating the funding vehicles. The group successfully raised 500 million US dollars, rising within days by a further 200 million following a surge in interest from the international finance community. The raised funds were split across the seven Etihad Partners entities, including Air Serbia, for a mixture of capital expenditure and investment in fleet, as well as for refinancing. The funding vehicle comprises largely of local and international investment funds. In September 2015, Air Serbia concluded a loan for 52.9 million US dollars from EAP I BV which matures in September 2020 with an annual interest rate of 6.96%. Furthermore, it finalised a loan for 63 million dollars with EAP II BV on May 20, 2016, which matures in June of next year.
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