While Air Seychelles focuses on restructuring, sustainability measures and attempts to raise new capital, the airline faces a standoff over unpaid debt from holders of around $70 million in troubled bonds issued on behalf of Air Seychelles.
According to Reuters, the creditors are taking legal action to push the African airline into liquidation in a bid to recover $1.2 billion owed by Abu Dhabi’s Etihad and Air Seychelles when the bond was issued in 2015 and 2016.
“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 as reported by Reuters.
Airspace Africa reported in May that hanging over the airline’s head was a potential parting of ways with Etihad Airways after an agreement was reached for the Seychellois government to take control of Air Seychelles.
Part of the deal, the gulf carrier was in the process of selling its 40 percent stake for $1 in Air Seychelles, cancelling over $60 million of debt in the process.
A total of $71.5 million is still owed to the group’s bondholders who have so far been unwilling to come to terms with the revised terms. The Seychellois government confirmed that Air Seychelles would pay no more than $20 million to settle the debt.
“The second negotiation that we have is with the bondholders, where we are proposing to them to pay only $20 million,” Seychelles secretary of finance, trade and investment noted in earlier.
They creditors said that “there had not been any substantive engagement nor any sense of urgency” from Air Seychelles or the government leaving no choice but to file a petition for the winding up the airline to recover the money due.
As a member of Etihad equity Alliance, Air Seychelles was a party to a bond issued in 2012 with the other member airlines accepting responsibility to pay off before the bond expired in 2021.
By Victor Shalton Odhiambo