SriLankan Airlines (the "Company") and the Government of Sri Lanka (the “Government”) announced that the Company held restricted discussions between 23 October and 19 November 2025 (the "Restricted Period") with six members of the Ad Hoc Group of Bondholders (the "Group", and together with the Company and the Government, the "Parties") relating to its US$ 175,000,000 Guaranteed Bonds due June 2024 (the "Notes"). The Company was joined by its financial and legal advisors, Lazard and Norton Rose Fulbright LLP, respectively, and the restricted members of the Group were joined by their legal advisor, Akin Gump Strauss Hauer C Feld. The Group controls approximately 55% of the aggregate outstanding amount of the Notes.

The Government and the Company are pleased to report that they have reached agreement in principle with the Group on the financial parameters of the restructuring of the Notes. The in-principle agreed terms remain subject to final approval from Sri Lanka’s Cabinet of Ministers as well as the non-objection from the International Monetary Fund and Sri Lanka’s Official Creditor Committee, pursuant to the Government’s commitments taken in the context of Sri Lanka’s overall public debt restructuring exercise.

The implementation of the in-principle agreed terms, as further described in the appendix, will allow the Company to complete the full normalization of its relations with its external creditors and to focus on ensuring the continuation of its operations.

Mr Sarath Ganegoda, the Company’s Chairman issued the following statement: “We are very pleased to have finally reached an agreement with the Ad Hoc Group of Bondholders, allowing us to now look to the future of our Company with greater optimism. We thank them for their patience and for the pragmatic approach they adopted to avoid an unnecessary escalation of this situation, which would have been detrimental to everyone. Our island nation should rely on a well-functioning airline company for its economic prosperity.”

Under the in-principle agreed terms, and subject to the successful implementation of the restructuring in accordance with such terms, the Government will be discharged from its liability pursuant to the guarantee and benefit from substantial debt and immediate liquidity relief to maintain the hard-fought long-term sustainability of its public finances. The agreement in principle includes a haircut of 15% of the total claim amount pertaining to the Notes while the balance will be exchanged for a mix of cash and medium-term bonds issued by the Government at an interest rate of 4%.

Dr Harshana Suriyapperuma, Secretary to the Treasury at the Ministry of Finance, reacted to the announcement with the following statement: “Today we are taking a new step in the full normalization of our relations with our external partners and in our efforts to restore our public finances. Thanks to this agreement, SS% of our external debt will now be settled. We count on the support of our official partners to assist us in this crucial new phase, which should also enable us to bolster our credit rating and prepare our eventual return to international capital markets.”

The terms of the in-principle agreed restructuring have been communicated to Sri Lanka’s Official Creditor Committee for their non-objection, as well as the International Monetary Fund to ensure compliance with Sri Lanka’s long term debt sustainability. Upon their confirmation, the Parties expect to be able to implement the transaction by the end of the year.

The Company and the Government would like to thank the Group and their advisors for their patience and constructiveness throughout the discussions and look forward to the prompt implementation of the transaction.