DUBAI, Aug 26 (Reuters) – Holders of around $70 million in troubled bonds issued on behalf of state-owned Air Seychelles have filed a petition to wind up the African airline, they said in a statement, after a standoff over the unpaid debt.
The move is the latest effort by creditors to recover $1.2 billion owed by Abu Dhabi’s Etihad Airways and airlines it partly owned when the debt was issued in 2015 and 2016, such as Air Seychelles.
At the time, Etihad owned 40% of Air Seychelles and it was in a consortium along with the Gulf airline and other carriers that borrowed the money through special purpose vehicle EA Partners.
“The Noteholder Committee (acting on behalf of the EA Partners bondholders) … filed a petition dated 19 August 2021 for the winding-up of Air Seychelles, and on 24 August 2021, such petition was served on, and acknowledged by, Air Seychelles,” the creditors said in a statement on Wednesday.
When the COVID-19 pandemic struck last year, Air Seychelles said it was struggling to honour its $71.5 million portion of the EA Partners debt and started restructuring talks with a steering committee of creditors in July.
A Seychelles government official told Reuters in May that Air Seychelles wound not pay more than $20 million to settle the debt.
The creditors said on Wednesday that they were still open to work with the government, the airline’s sole shareholders, to reach a resolution to the debt challenges.
But they said that there had been no “substantive engagement, nor any sense of urgency” from either Air Seychelles or the government, leaving no choice but to file a petition for the winding up of the airline to recover the money due.
Air Seychelles declined to comment.
Etihad is not legally obliged to back the bonds as the original $1.2 billion deals envisaged each carrier paying off its own portion of the debt, according to the debt documentation reviewed by Reuters.