Hong Kong Airlines’ US$6.2 billion debt revamp approved by creditors, hearings in Hong Kong and London courts
- Three groups of creditors vote for the restructuring proposal, while one faction raises objections
- Hearings on the restructuring will be held in London on Friday and in Hong Kong on or before December 14 even as a separate wind-up petition drags on
Creditors have approved the US$6.2 billion debt restructuring plan of Hong Kong Airlines, with the case set to be heard in Hong Kong and UK courts later this month, the South China Morning Post has learned.
An ad hoc group representing some bondholders, which claims to hold 40 per cent of the voting rights on HK$6.6 billion (US$841 million) of perpetual notes, said it would not challenge the decision given the low chance of reverting the decision.
The plan’s approval removes a key hurdle for the airline to tackle total liabilities of around HK$49 billion and to receive a new equity injection of HK$3 billion to alleviate a liquidity crunch.
All critical lessors – who leased aircraft to the carrier with debt ownership – voted for the proposal, according to documents seen by the Post on Monday.
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At the creditors’ meetings on November 25 and December 1, 90.8 per cent of unsecured creditors owning HK$20.29 billion yuan had voted for the restructuring plan. In the perpetual bond creditors group, close to 80 per cent voted for the proposal.
Some creditors decided against their original idea of voting against the proposal, after Hong Kong Airlines persuaded them to avoid “reputational risks”, one of the sources said.
Hong Kong Airlines did not directly comment on the Post’s request regarding the progress of the restructuring. It said the progress and updates on the debt revamp are posted on the company’s website.
Meanwhile, a winding-up petition against the airline, brought by Irish aircraft leasing company Stellar Aircraft Holding in March, in Hong Kong High Court, has been adjourned to January 16, the Post has learned.
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Hong Kong Airlines on Monday updated the court regarding creditors’ approval of the restructuring plan. A hearing on the restructuring plan could be held on or before December 14.
Another hearing regarding the approval of the restructuring plan will also be held in the High Court of Justice of England and Wales on Friday, according to the documents seen by the Post.
Hong Kong Airlines said it aims to restore financial stability and resume trading of its securities, and reduce debt burden via the restructuring.
The company will receive HK$3 billion, subject to the passing of the restructuring plan, from HNA Aviation and other unnamed joint venture partners in exchange for new ordinary shares in the carrier, which will represent at least 94 per cent of the issued shares of Hong Kong Airlines.
Additional reporting by Brian Wong