- Creditors have no reason to worry as bond is Govt.-guaranteed: Pathirage
- Says will repay creditors; simply have to reach agreement
- Govt. will not be part of restructuring despite providing guarantee
- Treasury too confirms not being a part of ongoing sovereign debt restructure
SriLankan Airlines remains committed to reaching an amicable settlement with all bondholders, despite the recent event of default in respect of its coupon payment for its $ 175 million international bond due on 25 December 2022.
Speaking to The Sunday Morning Business, SriLankan Airlines Chairman Ashok Pathirage assured that the creditors of the airline had no reason to fear since the bond issued by the airline was a Government-guaranteed bond.
He further stated that the airline was fully committed to reaching an amicable agreement with all bondholders to restructure the bond.
“Creditors have no reason to fear. We are committed to negotiating with them and repaying them. We just have to reach an agreement,” he stated.
Pathirage further explained that despite the termination of the consent solicitation process on 17 January, the airline was still engaged in negotiations with its creditors.
However, he stressed that despite the airline bond being a Government-guaranteed bond, it would not be part of the Government debt restructure and instead would be restructured separately by the airline.
This was confirmed to The Sunday Morning Business by Treasury Deputy Secretary R.M.P. Rathnayake, who emphatically stated that the Government would not be part of the SriLankan bond restructure.
However, he implied that the settlement of these bonds would likely be linked to the ongoing restructure of SriLankan Airlines by the Restructuring Unit established under the Ministry of Finance.
SriLankan Airlines was required to make the coupon payment for its $ 175 million Government-guaranteed bond due in 2024 by 25 December 2022. However, in early December 2022 it commenced a consent solicitation process to obtain bondholder approval for a deferment of the coupon payments and a waiver of ongoing events of default for a 12-month period.
It was reported that SriLankan Airlines had initially hoped to complete the consent solicitation process by 16 January 2023 before the end of the 30-day grace period to make its coupon payments expiring on 25 January 2023. However, such efforts proved futile and the consent solicitation process was cancelled on 17 January 2023.
Bloomberg reports that in a recent presentation to creditors on 12 January, the airline had revealed that its debt totaled $ 826 million, including the US currency bond and $ 352 million owed to State banks. Moreover, the amount of overdue and future payments owed to lessors and suppliers was $ 771 million.
As of the end of last year, liquidity equivalent to 3% of annual revenues was on hand, while interest charges were seen amounting to 9% of yearly revenue in 2023-2024.