The Etihad flight at Havana
The US court is seeking details on a $1.2b bond issue and any debt assumption mention in it. Image Credit: Gulf News Archive

New York: A New York court has sent subpoenas to Etihad and ratings agency Fitch this week seeking a document at the centre of a battle over $1.2 billion in debt issued by the Abu Dhabi carrier and airlines it partly owned, Reuters reported.

Investors, including fixed-income specialist BlueBay Asset Management, are seeking access to a "debt assumption agreement" signed by Etihad and Alitalia, the Italian carrier, in 2016, before Alitalia went bankrupt.

Etihad issued bonds in 2015 and 2016 through an Amsterdam-based special purpose vehicle, EA Partners (EAP), which then distributed the money to Etihad and other airlines, including Alitalia. According to EAP filings with the London stock exchange and a Fitch report in May 2017, Etihad agreed to cover the debt owed by Alitalia under the debt assumption agreement.

The investors believe the document will help them recover part of the money they invested in the bonds and sought access to it in a lawsuit filed on June 16 with the US District Court for the Southern District of New York. 

Judge P. Kevin Castel approved their request and subpoenas were hand delivered to registered agents of Fitch and Etihad in New York ordering them to disclose the debt agreement.

Etihad and Fitch declined to comment. They each have until July 7 to respond to the order or object.

The bondholders' request follows previous attempts to find solutions to restructure the debt, including a proposal submitted in April, to which Etihad has not responded. The  carrier spent billions of dollars on airline acquisitions that failed to deliver expected returns.

Some of the airlines that Etihad went into partnership with have since gone bankrupt and the bonds issued in 2015 and 2016 now trade at around 45 cents in the dollar.

A statement from Etihad read, "Etihad Airways did not issue EA Partners notes but is one of several borrowers from EA partners."