Air Baltic bondholders object to Chapter 11 financing arrangement

A group of Air Baltic bondholders has objected in US bankruptcy court to the way the airline arranged debtor-in-possession financing, arguing that the group was shut out of the process even though it had spent weeks negotiating to supply the money itself.

The carrier has received initial access to that funding under an interim order from the Southern District of New York bankruptcy court.

The objecting bondholders include the Israeli investment firm Klirmark Capital. They hold Air Baltic 14.5% notes maturing in 2029 with a face value of €398 million. Their filing says the group made substantial concessions to give the carrier room to manoeuvre, on the understanding that Air Baltic would seek a restructuring agreed outside court, a route that would have let the bondholders take part.

The group says it had good reason to expect a consensual deal was close, and that the airline instead moved within days to sign a commitment letter for the financing with outside lenders. In the bondholders' account, that points to a parallel marketing effort run while their own proposal was still on the table.

The filing states the group was not offered the chance to join the debtor-in-possession facility on the same footing as the third-party lenders, and that the process was set up in a way that kept them out. Their collateral, they say, is now backing the very facility they were excluded from.

The complaint was submitted as a limited objection and a reservation of rights.