A committee of investors who say they now hold 50 percent of a sovereign guaranteed bond issued by SriLankan Airlines which is in default have hired the law firm Akin Gump Strauss Hauer and Feld, a media report said.
The ad hoc committee was formed to find “a fair and sustainable solution for holders,” Bloomberg Newswires reported quoting a statement by the law firm.
The 175 million dollar bond was issued in 2019, rolling over a previously issued 5-year security.
A group of legal experts, writing in the London-based Financial Times in 2022 said the bond had an archaic collective action clause which was not aggregated with the rest of Sri Lanka’s securities, despite being issued in 2019, and was a ripe for activist investors to target.
It was issued under UK law with arbitration provisions, the report said.
Aggregated CACs came into use after 2014.
Sri Lanka restructured most of its sovereign bonds with one investor Hamilton Reserve, owning securities with non-aggregated CAC holding out and insisting on full payment.
S&P kept Sri Lanka’s sovereign rating at selective default pending the restructure of SriLankan Airlines bond, with Fitch and Moody’s upgraded the sovereign rating out of default.
Source: Economy Next
