Etihad Partners rejects Air Serbia loan reduction proposal

Two international financing vehicles, Etihad Airways Partners I BV and Etihad Airways Partners II BV, have rejected Air Serbia’s proposal to write down the value of two loans granted to the Serbian airline, worth US$52.9 million and US$63 million dollars, by 82%. In a statement, the two funds said: “The Steering Committee considered Air Serbia’s payment proposal unacceptable given that such proposal will permanently reduce, by approximately 82%, the amount to be paid by Air Serbia under the Air Serbia Loan Agreement. Serbia and, consequently, reduce the amount available to the issuer [Etihad Partners] to pay noteholders. The Noteholders have instructed the Issuer to notify Air Serbia in writing that it rejects Air Serbia’s Payment Proposal in its entirety and, furthermore, that the Issuer expects Air Serbia to pay all amounts under the Loan Agreement. of Air Serbia when they expire in accordance with the terms of the same “. .

In September 2015, Air Serbia concluded a US$52.9 million loan from EAP I BV which is due next month at an annual interest rate of 6.96%. In addition, it closed a loan for 63 million dollars with EAP II BV on May 20, 2016, due in June of the following year. Air Serbia made its most recent interest payment on the loans in March. He requested that the value of the loans be reduced by 82% “so that the borrower 1) continues to operate until the payment date, and 2) generates and accumulates the cash necessary to make said payment once the commercial activity is restarted ” . Etihad Partners also rejected a similar proposal made by Air Seychelles, which is also part-owned by Abu Dhabi-based Etihad Airways.

Etihad Partners financing vehicles have also taken Etihad Airways to court over the payment of Alitalia’s debt. The Emirati airline issued bonds in 2015 and 2016 through Amsterdam-based special purpose vehicle Etihad Partners, which then distributed the money to Etihad and other airlines it owned at the time. Abu Dhabi’s state airline spent billions of dollars on airline acquisitions that failed to deliver expected returns. Some of the airlines Etihad partnered with have since gone bankrupt and bonds issued in 2015 and 2016 are now trading at around 45 cents. Air Serbia has attempted to restructure its debt with Etihad Partners as a result of a revenue shortfall caused by the coronavirus pandemic.

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