Next Tuesday, the two administrators Sattar Hajee Abdoula and Arvindsingh Gokhool will hold a meeting of creditors. They will present a debt restructuring plan, coupled with the repayment plan to the main creditors and their representatives. The creditors will be divided into three groups. Each of the classes will meet and vote separately and at different intervals. Class A – consisting of the aircraft operating lessors, at 11:00 a.m., Class B – consisting of the hedging counterparties, at noon and Class C – consisting of the general estate, at 2:00 p.m.
The directors believe that the best option is for the company to execute the Deed of Company Arrangement (DOCA): first, the returns to creditors would be greater than under the other options. They argue that the returns in a liquidation would be zero for all affected lenders of the company. They add that simply terminating the administration and returning the company to its directors is also not viable as the company is insolvent and will not be able to pay its debts as they fall due.
Creditors will be faced with three options. First, decide that the company should execute the proposed Deed of Company Arrangement (DOCA). Second, decide to terminate the administration; or third, decide that the company be put into liquidation.
In the event that all classes of creditors vote in favor of executing the DOCA, payment of the proposed amounts will be made by October 31, 2021. On that date, all unclaimed or unresolved amounts will then be transferred to a trust for a period of one year. Air Mauritius Limited will then exit administration on November 1, 2021.
The proposal will pass if approved, by a 75% majority of those voting in that category. All those affected must approve the DOCA for it to pass. If not, the directors will become the directors of the DOCA, unless the creditors decide to appoint someone else at the meeting; and the DOCA must be signed by the corporation and the directors within 21 days of the meeting. Once signed, the DOCA is binding on the corporation, its creditors, its directors and shareholders, and the directors of the deed.
After the ‘Watershed meeting’ of the creditors of Air Mauritius on September 28, the directors of the company, Sattar Hajee Abdoula and Arvindsingh Gokhool, will have another meeting, with those of Airmate Ltd, on September 30. Airmate Ltd is a wholly-owned subsidiary of Air Mauritius that employs 881 of the national airline’s 2,441 employees. One in three Air Mauritius workers is employed by Airmate Ltd.
In their Administrators Report, submitted on Thursday afternoon, Sattar Hajee Abdoula and Arvindsingh Gokhool strongly recommend the survival of the company and propose the adoption of the Deed of Company Arrangement (DOCA), which contains a debt restructuring plan that they will propose, at the meeting next Thursday.
As with Air Mauritius, three options are on the table: adoption of the DOCA, termination of the voluntary administration that began on April 22, 2020 or outright liquidation of the company. But liquidation is not recommended by the administrators, as Airmate “has no assets that can be sold. On the other hand, accepting the DOCA would allow creditors to recover some of the money they are owed by Airmate Ltd. However, they will not be able to recover all their money. “If the DOCA is accepted, they will receive 50 cents of every rupee the company owes them,” the directors said in their report. That is, only half of what they are owed. The financing of this operation is Rs 20 million. Note that 75% of them must vote in favor electronically for the plan to be adopted. Airmate has more than 1,000 creditors, most of whom are its own employees.
GM to inject Rs 12 billion
The government, as a shareholder of Air Mauritius (MK), has agreed to advance a loan, through an entity it owns, to the national carrier by Oct. 1. A loan of Rs 9.5 billion from which the creditors will be paid, subject to the terms and conditions set out in a document sent to them on the sidelines of the Watershed Meeting on September 28.
The government has also agreed to advance an additional Rs 2.5 billion, which is the additional funds needed to keep the company going. The condition sine qua non, as stated in the funding letter dated September 20 from Cabinet Secretary Nayen Koomar Ballah to the directors, is the adoption of the DOCA by the creditors. In addition, it appears that the following claims are not included in the equation. That of the passengers for a refund or other monetary compensation under various conditions.
Then, the revised claim of the Air Mauritius Limited Pension Scheme for an amount not exceeding Rs 2.8 billion in full and final settlement. Secondly, the pension claim of those who took early retirement on or about August 1, 2020 at the invitation of MK, for payment of their “lump sum” under the Pension Scheme. Finally, any debt where a compromise or reduction has been reached with the trustees and which has, therefore, agreed not to participate as a creditor.
Rs 385 million saved in social savings
The report of the administrators of Air Mauritius, Sattar Hajee Abdoula and Arvindsingh Gokhool, is categorical: the implementation of the social plan has allowed Air Mauritius to save 7.7 million euros, or Rs 385 million since it went into voluntary administration on April 22, 2020.
This amount is the result of three main measures included in the social plan: the revision of pilots’ contracts (Rs 125 million); the introduction of part-time jobs for a number of employees, Rs 240 million and the decision to grant special leave without pay for a period of two years, Rs 20 million.
The two directors also point out that the company has accumulated losses in a row for 15 consecutive years, from 2004 to 2019, with losses of more than Rs 1 billion.
