Creditors of Russia's S7 Airlines are seeking to obtain safeguards against the company's non-payment of due debts, after it missed a Rb2.3 billion ($63 million) coupon interest payment on corporate bonds.
Its agent, Raiffeisen Bank, has proposed a rescheduling scheme, under which this sum is to be paid in three instalments - of 20%, 40% and 40% - until August 2010. Major bondholders will discuss the proposal during an extraordinary meeting next week.
Sources close to the matter expect them to take a pro-active stance by requesting guarantees covering all of the carrier's outstanding debts. S7 reports Rb11.5 billion in current liabilities to be repaid during 2009-10, with Sberbank, Vneshtorgbank and UralsibBank accounting for the bulk of debt.
These banks also hold a substantial portion of its stock as loan collateral but indicate that its value has decreased along with the company's market capitalisation, which is now around Rb10 billion.
S7's management is looking to receive soft loans from Russia's dedicated treasury-backed relief fund as well as raise finance under Government guarantees. As the nation's second-largest airline in terms of passenger numbers, and employer of more than 4,000 people, S7 is included in the list of 15 strategically-important aviation enterprises.
Transport deputy minister Alexander Misharin says S7 could gain access to the state funds and guarantees but this is conditional on a sound anti-crisis plan, a workable agreement with bondholders and disclosure of its ownership structure.
An ad hoc regulator, supervising financial state of Russian top-tier enterprises, expects S7 to fulfil these requirements within the next two weeks.
Russia's state property ministry has a 25.5% blocking stake in the company while deputy managing director Natalya Filyova holds the title to 63,3% of privately-owned shares.
Misharin suggests this will change unless S7 manages to pay off debts and loans as they will be swapped for equity through an additional share issue to the benefit of creditors and lenders.