SriLankan Airlines and the Government of Sri Lanka have reached an in-principle agreement with major bondholders on the restructuring of USD 175 million in Guaranteed Bonds due June 2024, pending approval from the Cabinet, the IMF, and the Official Creditor Committee (OCC).
The discussions, held between 23 October and 19 November 2025, involved the Company’s financial and legal advisors, Lazard and Norton Rose Fulbright LLP, and the Ad Hoc Group—holding approximately 55% of the outstanding notes—represented by Akin Gump Strauss Hauer & Feld.
The agreement sets out the financial parameters for the restructuring, subject to final approval by the Cabinet of Ministers, and non-objection from the IMF and OCC, as part of the Government’s broader public debt restructuring program.
Under the agreed terms, bondholders will accept a 15% haircut on the total claim amount of the Notes, with the remaining balance to be exchanged for a combination of cash and medium-term Government bonds carrying a 4% interest rate. The restructuring will allow SriLankan Airlines to stabilize its relations with external creditors and focus on ongoing operations.
“Under the in-principle agreed terms, and subject to successful implementation, the Government will be discharged from its liability under the guarantee and benefit from substantial debt and immediate liquidity relief, supporting the long-term sustainability of public finances,” the statement said.
SriLankan Airlines Chairman Sarath Ganegoda commented: “We are pleased to have reached an agreement with the Ad Hoc Group of Bondholders, enabling us to look to the future of our Company with optimism. We thank them for their patience and pragmatic approach, which helped avoid unnecessary escalation that could have been detrimental. A well-functioning airline is essential for our nation’s economic prosperity.”
Dr. Harshana Suriyapperuma, Secretary to the Treasury, added: “This agreement marks a new step in normalizing relations with our external partners and restoring public finances. With this, 99% of our external debt will be settled. We look forward to the support of official partners to strengthen our credit rating and prepare for a return to international capital markets.”
The terms of the restructuring have been submitted to Sri Lanka’s Official Creditor Committee and the IMF for confirmation to ensure compliance with long-term debt sustainability. Pending approval, the parties expect to implement the transaction by the end of the year.
Both the Government and SriLankan Airlines expressed appreciation to the Ad Hoc Group and their advisors for constructive engagement throughout the process.
