SriLankan Airlines announced the unsuccessful conclusion of recent restricted discussions with key bondholders regarding the restructuring of the airline’s defaulted $ 175 million guaranteed bonds.

Despite constructive engagement between 28 July and 1 August, the parties failed to reach a consensus, citing significant differences between proposals put forward by the airline and the ad-hoc group of bondholders.

As part of the exchange, the company submitted an initial restructuring proposal, which involved swapping the existing notes for a combination of cash and a new instrument to be issued under a tap of the Sri Lankan government’s outstanding $ 1.2 billion 4% bonds due in 2028.

This proposal was contingent upon receiving no-objection confirmations from key stakeholders, including the International Monetary Fund (IMF) and Sri Lanka’s Official Creditor Committee (OCC).

In response, the group presented a counterproposal. After thorough evaluation in coordination with the government and its advisors, the company determined that the terms of the counterproposal were significantly misaligned with what would be acceptable to its bondholder base, particularly in the context of the country’s ongoing public debt restructuring.

As a result, both parties agreed to terminate the restricted discussions.

The company, alongside the government, reiterated its intention to pursue a consensual resolution that allows bondholders to participate in addressing the ongoing payment default, while recognising the constraints posed by the company’s limited repayment capacity and Sri Lanka’s commitment to long-term debt sustainability under its IMF programme.