Air Seychelles draws $20mn line in sand for Etihad

Air Seychelles (HM, Mahé) can pay no more than USD20 million of the USD71.5 million it still owes to Etihad Aviation Group bondholders, Patrick Payet, Seychelles’ secretary of state for finance, has reiterated in an interview with Reuters, even though creditors have threatened to wind up the now fully state-owned airline if the debt is not paid in full. A committee of creditors at EA Partners, a special purpose vehicle that is part of the Etihad Airways (EY, Abu Dhabi Int’l) parent company, told the Seychellois carrier last month to repay its debt, warning in a regulatory filing: “Should Air Seychelles not comply, […] the creditor will apply to the Supreme Court of Seychelles for an order that Air Seychelles be wound up.” The committee has since confirmed to the news agency it has rejected the USD20 million offer, although it will first give the archipelago nation’s government a “grace period” to finalise a separate settlement with Etihad Airways before filing a winding-up petition. As previously reported, Seychelles reached a deal with Etihad a week ago to buy its 40% stake in the flag carrier at a substantial discount. The creditors explained that a similar discount to the one Seychelles had received from Etihad was unacceptable to offer to financial investors, as the airline had been a strategic shareholder. However, Payet told Reuters: “The USD20 million which has been offered represents the upper limit with regards to the funding that Air Seychelles and/or the government of Seychelles can get approval for and successfully raise on the international market for settlement of the bond.” If creditors cannot accept the USD20 million offer, Air Seychelles would be forced to consider other options, such as insolvency and liquidation proceedings, he said. “It is the bondholders’ right to pursue legal options. However, all our forecasts show in such an eventuality the bondholders will recover significantly less than the USD20 million currently on offer, and it will take considerably longer to receive anything,” he concluded. Meanwhile, in a virtual press conference on May 6, Seychelles’ president, Wavel Ramkalawan, said that the government currently has a deficit of USD200 million in its national budget and that discussions are still ongoing “with friendly countries and the International Monetary Fund,” Seychelles News Agency reported. It was with a great sense of pride, he said, that the country had regained full ownership of its national airline, but he acknowledged that money was still owed to bondholders. “Yes, we have a debt with Etihad. As of today, we owe them USD20 million and we are negotiating to see how we can pay this. The bondholders are not interested in any big discounts, but we are negotiating,” he said.