Creditors to sell $463 million of Air Berlin and Alitalia claims

A group of creditors that bought Etihad Airways PJSC-linked bonds are preparing to auction $463 million of claims against insolvent airlines Alitalia and Air Berlin to recover some of their investment.

The trustee of bonds issued by EA Partners I and II—two special purpose entities set up by the Abu Dhabi-based carrier—hired Barclays Bank Plc to arrange the sale, according to a statement. Potential buyers will be able to access documentation on June 21 and the auction will take place within two weeks, it said.

Etihad sold $1.2 billion of bonds between 2015 and 2016 with the help of financier Lars Windhorst and Goldman Sachs Group Inc. to prop up loss-making airlines in which it owned stakes. The notes ended up in restructuring after Etihad changed its strategy and pulled the plug on its support for the airlines.

Air Berlin, Alitalia and India’s Jet Airways have since filed for insolvency, while creditors have so far failed to reach an agreement over Air Seychelles’s debt with the local government.

Investors in EA Partners I received just 43% of their money when the notes came due last year. The EA Partners II’s bondholders also received just a portion of the money owed when the notes matured earlier this month.

Bondholders including BlueBay Asset Management, Sandglass Capital Advisors, Sancta Capital and VR Global Partners have been unable to bring Etihad to the negotiating table over the last two years, as the carrier doesn’t recognize the debt as its own.