SriLankan Airlines misses coupon, triggering default under 2024 bonds

By Marisa Wong

Los Angeles, June 29 – SriLankan Airlines Ltd. announced that events of default have occurred under its $175 million 7% bonds due 2024 (ISIN: XS2010609662) guaranteed by the government of the Democratic Socialist Republic of Sri Lanka, the 99.52% shareholder of the company.

A coupon payment for the bonds was due on June 25, but that payment has not been made.

A default occurring in the payment of interest on external debt of the guarantor in an amount exceeding $25 million constitutes an event of default under the conditions of the bonds, according to a company notice.

In addition, an interim debt policy announced on April 12 constitutes a general moratorium on the payment of principal and interest on external debt by the guarantor, which constitutes an event of default under the bonds.

According to Wednesday’s notice, Sri Lanka is seeking urgent financial assistance from the International Monetary Fund. This follows the April announcement of the interim policy regarding the servicing of Sri Lanka’s external public debt.

There is a 30-day grace period that applies to any non-payment default under the 2024 bonds.

The company’s board considers it necessary to make use of the 30-day grace period to further determine the position of the company, both in respect of the upcoming coupon payment and its debt obligations more generally.

The company said its board intends to establish a transparent process for discussions and communications with all bondholders and to pursue an active dialogue with bondholders as soon as it is in a position to do so.

The flag carrier of Sri Lanka is based in Katunayake, Sri Lanka.

© 2015 Prospect News.
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