Explainer on AV3
October 8, 2024 10:09 pm | Posted in Business News | Share now TwitterFacebook
By Mavuku Tokona.
The Air Vanuatu (Operations) Limited Liquidation ended last week after Judge Justice Maree Mackenzie made the decision on October 2nd and Ernst & Young (EY) Australia issued a press statement of October 3rd.
In the statement, EY highlights two main points in the Deed of Compromise approved by the Supreme Court of Vanuatu, 1, the liquidation is over and 2, “the shares in Air Vanuatu have been transferred to AV3”.
Here’s what we know about AV3
AV3 Ltd is registered with the Vanuatu Financial Services Commission (VFSC) as a private company with four Directors/Shareholders holding 25% each of the company, they are:
1. Anatole HYMAK
2. Rick Tchamako MAHE
3. Johnny KOANAPO
4. Seremaiah Matai NAWALU
The residential address of AV3 is the Ministry of Foreign Affairs, Independence Garden, Port Vila, Vanuatu and the business was registered on 5 June 2024.
According to the court document published on PACLII case in the Matter of Air Vanuatu Operations Ltd in Liquidation between Kelly v Perry [2024], 11 Expressions of Interests (EOIs) were received to purchase AVOL shares, of the 11 the Liquidators determined that AV3 “represented the most viable restructuring option” and AV3 is a “special purpose entity wholly owned by the Vanuatu Ministry of Foreign Affairs and was incorporated on 5 June 2024”.
AV3’s proposal for the recapitalisation of AVOL’s business are:
1. AV3 would contribute USD 3.3 million (over VT390M) into a fund under the terms of the creditors compromise in 3 tranches – the first USD 1.1 million (over VT130M) upon approval of the creditors compromise, the second 4 months later, and the third 10 months after the approval of the compromise.
2. The moratorium period is 10 months.
3. AVOL will be released from all creditor claims once the compromise fund is distributed to affected creditors (other than those specifically identified as not being compromised).
4. There would be a Deed of Compromise.
5. The Liquidators will adjudicate and admit or reject claims.
AV3 will provide a letter of comfort to AVOL notifying AV3’s intention to contribute funds to support AVOL’s ability to meet its future financial obligations. (A letter of comfort is a written document that provides assurance that an obligation will be met)
In the Application to set aside the compromise or that the applicants are not to be bound by the Deed of Compromise (5 of the applicants are pilots who were employed by AVOL, the 6th applicant, is Thierry Bourgeois, a former director of AVOL) the applicants raised two points that’s in relation to AV3:
1. Names of other interested parties not disclosed
2. No reasons why AV3 should be accepted
What happens if the 3 AV3 tranche payments are not made?
If AV3 defaults on making the payments to settle the claims of the affected creditors then creditors will be given an opportunity to terminate the Deed of Compromise in which case the liquidation of AVOL will be reinstated and the shares transferred back to the original shareholders.
Key AV3 Extracts from the court judgement:
1. AV3 is a Government entity and is likely to have the financial capacity to complete the recapitalisation and fund the recommencement of services.
2. AV3 have agreed to provide USD 3,300,000 to compromise the debts of affected creditors. That is the cornerstone of the compromise and they are obligated to do so.
3. Taken at its face value, AV3 state an intention to contribute funds to assist Air Vanuatu to meet its financial obligations during the comfort period. It does not purport to be a guarantee.
AV3 and Third Parties:
The Liquidators note that it is their understanding that AV3 intends to enter into arrangements with third parties who have expressed interest in funding the business of AVOL to support it into the future.
They note their understanding that negotiations between AV3 and third parties are ongoing, but no commitments have yet been reached, and that the compromise is not conditional on AV3 entering into any arrangements with third parties.
What we are confused about:
1. Why is AV3 registered in VFSC as a private company and addressed in the Supreme Court as owned by the Government? Is AV3 a Public or Private Company?
2. Where did AV3 get this money from? Is it their own or public funds?
3. If AV3 was highlighted as the best option to recapitalise AVOL to the tune of USD$3.3M in 3 payments, why did the Liquidators note that AV3 are seeking to enter into third party arrangements in the future for support?
3. Why are the Directors of AV3 not providing information to the media when requested? Why is there so much secrecy?
4. In regards to other bids for AVOL, if AV3 was to recapitalise the Airline and save it, what were the proposals of the other 10? Did AV3 really have a better proposal than the other 10 bids?
To conclude:
We don’t know much about AV3 and all our attempts to find out more are futile.
The directors of this mysterious company that’s considered private with VFSC and government owned in court are not saying a word to mainstream media.
We don’t know if a new board is being formed now that the liquidation is over, we don’t know if Joseph Laloyer is still the Chief Executive Officer (CEO), what we do know is that they are looking for a Chef, what for? Only them and the Good Lord know.
Liquidation is also still a strong possibility if the payments are not honoured by AV3 and the shares would return to its original holders, the only assurance of payment we know of is a confirmation of a letter of comfort that was mentioned in the Supreme Court in September.
The future for Air Vanuatu according to the public at large is still unknown.
Recapitalisation of the airline and a promise of injecting USD$3.3M are only words being said, and similar words have been echoed throughout the years of our Airline, what makes these words any different?
