As previously reported, airBaltic announced on Thursday that it has reached an agreement with potential creditors for a new loan. The airline refers to this as interim financing. The size of the bond-backed loan is up to €257 million, with a repayment term of just five months. The interest rate is fantastic – 25% per annum! "At first glance, this may seem shocking and like some absurd deal, some last chance and something else, but I want to say that this is now one of the planned activities. It is clear that the risks are high both in terms of the recapitalization process and in terms of the aviation business as such. And it is clear that uncertainty remains," said Andrei Martynov, chairman of the board of airBaltic, in an interview with TV-3 news service. All of this helps airBaltic continue to fly. An agreement has been reached with certain existing bondholders and external financing providers. TV-3 reports the names of these new creditor-saviors — the London-based investment management company Polus Capital Management and the Israeli-registered investment company Klirmark Capital 4. What is already clear now: the loan from these new creditors will be secured by collateral. In fact, the same collateral that secures the existing bonds, but with a higher priority. In other words, the IV-3 channel reports, these creditors will be ahead of everyone in line if airBaltic suddenly goes bankrupt and needs to start selling the company in parts. At the same time, all, so to speak, old creditors may also be included in this restructuring program, including the Latvian state itself, which holds not only shares of airBaltic but also bonds. For all this to be realized, the approval of airBaltic bondholders and shareholders is still needed. The relevant meeting is expected next week.
