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NEWS

$500 Million Notes Offering from Etihad’s Equity Alliance Partners

June 01, 2016

London - Paul Hastings LLP, a leading global law firm, has advised EA Partners II B.V. on its issuance of $500 million 6.750% Notes due 2021, which closed today. EA Partners II B.V. replicates the multi-award winning financing platform that was created to fund the refinancing, capex and working capital needs of Etihad’s equity alliance partners’ airline, cargo and airport service businesses using a single, rated, secured note issuance in September 2015. Proceeds from the issue of Notes by EA Partners II B.V. will provide long-term funding on standardised terms for Etihad Airways, Air Berlin, Air Serbia, Air Seychelles, Alitalia and Etihad Airport Services via a bespoke package of debt instruments.

The Notes benefit from Etihad’s “A” credit rating on an indirect basis, but avoid any on-balance sheet liability for Etihad in respect of its airline alliance partners. The structure utilizes an innovative combination of structured and leveraged finance features to provide credit enhancement and longevity to protect against underlying obligation defaults, including:

  • secured cash deposits of the equity alliance partners which accrete over time and which service payments on the Notes if there is a payment default on an underlying debt obligation;

  • “MFN” top-up accounts to augment the equity alliance partners' cash deposits in the event an alliance partner raises funding at a higher interest rate than under the structure; and

  • remarketing provisions for stressed debt obligations and associated coupon reset mechanics to enable the platform to survive following certain events of default by an alliance partner.

Paul Hastings assisted with the overall Note and collateral structuring and coordinated negotiations of the underlying debt obligations with each of Etihad’s participating equity alliance partners.

The Paul Hastings team was led by partners James Cole (bond structuring) and Karl Clowry (loan structuring) in London and Etienne Mathey in Paris, with associates Edward Holmes and Dionne Brown assisting on the capital markets aspects, associates Liam Mills and John Lambillion assisting on the underlying debt instruments, partner Arun Birla assisting on the tax aspects and partner Ugo Giordano and associate Sofia De Cristofaro assisting on the Italian law governed minibond issued by Alitalia as part of the transaction.

ADS Securities LLC, Anoa Capital S.A., Goldman Sachs International and Integrated Capital PJSC acted as joint placement agents for the Notes. The placement agents and BNY Mellon, as trustee, were advised by Ashurst, led by partner Francis Kucera and counsel Malcolm Charles, respectively. Freshfields Bruckhaus Deringer advised Etihad. Loyens & Loeff N.V. advised EA Partners II B.V. on Dutch law aspects of the Notes and underlying security arrangements.

This transaction achieves Etihad’s highly specific commercial goals through the efficient reproduction of the prior deal’s novel combination of capital markets, structured finance and leveraged loan products and extends Etihad’s equity alliance partners’ airline bond maturity profile out to 2021.

At Paul Hastings, our purpose is clear — to help our clients and people navigate new paths to growth. With a strong presence throughout Asia, Europe, Latin America, and the U.S., Paul Hastings is recognized as one of the world’s most innovative global law firms.

Practice Areas

Global Finance

Securities and Capital Markets


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