Norwegian will convert debt into equity
The Norwegian Board of Directors will, through a number of measures, strengthen the company’s balance sheet and fulfill the Norwegian authorities’ terms in Trades Two and Three of the Government’s loan guarantee scheme.
The Board of Directors proposes that debt be converted to equity by entering into agreements with, among other things, bondholders, lenders, leasing companies and suppliers.
The proposals include:
- Parts of the debt of leasing companies, banks and other creditors are sought to be converted into shares in Norwegian.
- Use of other financial instruments to convert other relevant debt to equity or other equity instruments.
- All or part of the bond loans are converted into shares in Norwegian.
- Implementation of a subsequent private placement with possible benefits to existing shareholders.
– What the board now proposes is crucial to meeting the stringent requirements that the authorities have set for us to have access to loan guarantees that will give us a total of NOK 3 billion. Our goal is to be able to get back on the air, reopen our routes and make sure our laid-off colleagues come back to work. We at Norwegian look forward to coming back better and stronger than ever so that we can continue to offer affordable airline tickets to all our good and loyal customers, says CEO Jacob Schram of Norwegian.
– We have started a dialogue with the bondholders and other creditors. We have also already started work on “New Norwegian” and it will continue at full strength for the next few weeks, says Schram.
The company reported an expectation of positive earnings for 2020 on February 13, after implementing a number of measures in 2019 to improve the financial situation. However, this was changed through a notification to the Oslo Stock Exchange on March 6, following a large fall in demand as a result of government-imposed travel restrictions in connection with the COVID-19 situation. Norwegian has implemented several measures in recent weeks to further reduce costs. Among other things, the company has parked large parts of the fleet and laid off 90 per cent of its employees. Norwegian is still carrying out some domestic flights in Norway to maintain important infrastructure in the country.
Wide support from customers and employees
In recent weeks, the company has received broad support from customers and other supporters. Among other things, they have emphasized the importance of Norwegian continuing to fly after this crisis, because the company provides low prices, freedom of choice and competition in the market.
– There is no doubt that there is a need for Norwegian in the future. Norway’s vision has been that everyone should be able to fly, and since its inception in 2002, Norwegian has gone from being a company with four domestic routes in Norway to becoming a preferred company also internationally. We will continue to be. We make sure that people can meet each other face to face and for economic activity everywhere we fly. I am grateful and humbled by all the support we have received in recent weeks and the e-mails I have received from customers, employees and other supporters, Schram says.
Reported by Tom Andersson Travel News Norway