Air Baltic bondholders’ meeting postponed for lack of quorum

Air Baltic’s bondholders’ meeting was postponed because it did not have enough participants to reach a quorum, ERR reported. The meeting has been rescheduled for August 17, but the airline must pay interest on its loans three days earlier.

Neither the Treasury, appointed by the Latvian government to represent the state, nor Air Baltic representatives said how far the virtual meeting fell short of the required quorum. The postponement is a bad sign.

The airline’s actual financial position has not been disclosed, with the government discussing Air Baltic in closed sessions. Publicly available information indicates that bondholders are being asked to defer interest payments and add them to the principal.

A few years ago, Air Baltic issued bonds worth 380 million euros at an annual interest rate of 14.5 percent. The Latvian state holds a 50 million euro share. No information has been provided about investment expectations or options.

“The state wears two hats in Air Baltic. On the one hand, it is a creditor, or a lender to the joint-stock company. On the other hand, it is also a shareholder representing its own interests. We must keep these two roles separate,” Latvian Prime Minister Andris Kulbergs said.

Air Baltic chief executive Erno Hilden gave one of his few interviews to the company’s in-flight magazine. He said the airline did not plan to disclose detailed information about its situation because other companies behaved the same way. According to Hilden, so-called aviation experts were publishing inaccurate information.

Hilden acknowledged the lack of information available to the public, but said it was unavoidable in order to protect trade secrets. The public must therefore rely on Transport Minister Rihards Kozlovskis’s assurance that the airline would continue operating during the restructuring. The business plan approved by the government has not been made public.

“The company has been tasked with ensuring uninterrupted operations and keeping Riga as its main base. Naturally, it must operate all flights during the restructuring, which may last up to six months. The airline must fully meet its obligations,” Kozlovskis said.

The minister said that if private capital was brought in, the Latvian state would retain a stake of at least 25 percent plus one share, along with the requirement to maintain Riga as the airline’s main base. He said the Latvian government was not currently considering providing more money to the airline.