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SriLankan seeks suspension of payments from holders of bonds worth USD 175mn
View(s):The debt-ridden SriLankan Airlines has requested a 12-month suspension of debt-service payments from holders who have invested in its USD 175 million government-guaranteed international bonds which mature in 2024.
The deferral of interest payments covered the coupon payments due on December 25, 2022, and June 25, 2023. The bond was issued at a guaranteed rate of 7 percent a year. Confirming the Consent Solicitation filed by the national airline, the Finance Ministry issued a statement saying that the moratorium would “provide SLA and authorities sufficient time to develop a reorganisation plan and a long-term strategy for the company, and to hold discussions with the company’s stakeholders”.
“Sri Lanka is going through an unprecedented economic crisis caused by the Covid-19 pandemic, the resulting global economic downturn, former policy mistakes and the rise in global energy and food prices,” the Ministry said.
It also referred to the Government’s ambitious reform plan, and ongoing talks with the International Monetary Fund (IMF) to secure a USD 2.9 billion Extended Fund Facility.
As part of its ongoing plan to restore the country’s economy and debt sustainability, the Sri Lankan authorities — in coordination with the IMF — were working with State-owned Enterprises (SoEs) on reform and reorganisation plans to limit the impacts on Sri Lanka’s sovereign balance sheet, the statement added.
“The recovery of post-pandemic international travel has had a positive impact on passenger numbers. However, the situation in Sri Lanka remains difficult and this in turn continues to put pressure on the company’s revenue and costs,” the statement said.
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