Expert: failure to reach deal on August 17 could push airBaltic toward insolvency filing

A meeting of bondholders of Latvia's national airline airBaltic, held on August 3, failed to gather the quorum needed to proceed. The meeting was meant to decide on postponing bond interest payments and on options for raising further financing. According to information published on the State Treasury's website, a repeat meeting has been scheduled for August 17.

Latvia was represented at the meeting by the State Treasury, acting under a mandate from the Cabinet of Ministers. The state's voting position had previously been approved during a closed part of a government meeting.

Uncertainty over quorum and payments

airBaltic supervisory board chairman Andrejs Martinovs told the LETA news agency he could not disclose how many participants were missing to reach quorum, while the State Treasury said it did not have information on what share of bondholders had joined Monday's remote meeting.

Asked whether postponing the meeting to August 17 means the company will still have to make the interest payment due on August 14 — a payment that had been intended for capitalization — Martinovs said he believed it would not be required, since the bond prospectus sets a deadline that the company is not breaching. The bond issuance prospectus allows for a limited delay of up to 14 days in interest payments, a period during which such a delay is not yet considered a default. The State Treasury, however, took the opposite view, saying it believes the August 14 payment will most likely still have to be made.

Warning of possible insolvency

Speaking on TV24's programme "Nacionālo interešu klubs" about the significance of the August 17 meeting was Raitis Logins, managing partner in Latvia of the financial consulting and audit firm Grant Thornton Baltic. He forecast that if no agreement is reached at that meeting, airBaltic will file for insolvency, and that the process would then unfold rapidly, in what he described as an avalanche effect.