Dear Colleagues,

Air Seychelles has today entered company reorganisation with the appointment of administrators in relation to the company. In company reorganisation, Air Seychelles willcontinue to operate as it has before the appointment of the administrators and the company's employees in flight operations as well as in ground-handling will continue to be employed.

Air Seychelles has faced significant challenges over the past 18 months arising from the COVID pandemic and its impact on international travel and tourism. However, AirSeychelles' financial difficulties arise mainly due to significant debt that was incurred during the stewardship of the airline by Etihad Airways, which was previously a 40%shareholder in the company. This debt comprises amounts that were owed directly to Etihad and also loans of almost $72 million that were funded by the capital markets and arenow controlled by bondholders of EA Partners.

The Government of Seychelles, which owned the remaining 60% of the shares in Air Seychelles has sought to find a solution to the airline's financial problems. To that end, theGovernment has bought out Etihad's 40% shareholding. Government is thus the sole shareholder in Air Seychelles today. Government also negotiated a substantial discountdebt of $70 million that was owed to Etihad. This transaction was the first step in a planned restructuring of the company, which both the Government and Air Seychelles agreeis essential to ensure the viability of the company and to secure the components of its operation that are in the national interest.

The Government and Air Seychelles have been in discussions with representatives of the bondholders of EA Partners but have not as yet been able to reach agreement onterms for settling this debt that Air Seychelles can afford. The Government's ability to assist Air Seychelles financially is also limited by the capping arrangements recentlyagreed with the International Monetary Fund (IMF) whereby no further subsidy by Government to Air Seychelles is permitted.

The EA Partners bondholders have in the meantime presented a petition for the winding up of Air Seychelles. This petition is designed to exert pressure so that the bondholderscan maximise their recoveries on their debt. However, it is counterproductive, as if the winding up that the bondholders seek takes place, the creditors of Air Seychelles(including the bondholders) will receive repayment of only a very small fraction of their debts. Further, the winding up of Air Seychelles would bring an end to its operations andso leave Air Seychelles' employees out of work.

Therefore, the only course of action, is to enter company reorganisation, which is a process under the Insolvency Act that is designed to allow the company to continue itsbusiness while it determines whether a rescue plan should be presented to its creditors in order to provide a long term solution for the company's financial difficulties. It is to becontrasted with winding up, where a liquidator is appointed to take control of the company's assets and sell them to repay all creditors. In a winding up, the company and itsbusiness will come to an end.

Mr Bernard Pool, assisted by Mr Suketu Patel, has been appointed as administrators of Air Seychelles. Their task will be to consider the optimum ways of restructuring thecompany and settling its debts.

During the company reorganisation, the company will continue to operate normally with the same management and Board of Directors under the supervision of theadministrators, who will prepare and present to the creditors - the main ones being the bondholders and the Government - a rescue plan for the company. This process isexpected to take 3-6 months. In the meantime, all the employees of the company will remain in post and the operations of the company will continue as before.

Regards,
Ministry of Transport and Air Seychelles