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Bloomberg
Norwegian Air Shuttle ASA’s shareholders approved a restructuring plan that will qualify the struggling carrier for state aid and keep it afloat in the coming months.
After the company clinched a deal with creditors following intense talks through the weekend, shareholders approved the plan at an extraordinary general meeting on Monday, according to a statement. The restructuring will see leasing companies and bondholders convert more than 10 billion kroner ($957 million) of debt into equity, wiping out current shareholders. The company will also raise as much as 400 million kroner in new equity.
The deal allows Norwegian Air to meet strict requirements from the Nordic country’s government to access the remaining 90% of 3 billion kroner in state loan guarantees. Without it, the company would have run out of cash by this month.
Like the rest of the airline industry, Norway’s low-cost carrier has suffered a body blow from the Covid-19 crisis, which came just as the company was implementing a strategy to cut costs and reduce capacity after years of debt-fuelled growth. Norwegian’s upcoming equity issue will be its fourth in about two years. Norwegian has grounded almost its entire fleet and drawn up a plan for a new, leaner company with fewer aircraft. But its fate remains far from clear. It expects to burn through as much as 500 million kroner of cash every month starting in July 2020, it said in a presentation.
Painting a bleak outlook for the industry, Norwegian said it only expects a gradual recovery in activity from the second quarter of next year, and normal operations to resume no earlier than 2022. Further funding efforts will likely be needed as soon as this year, it said in the same presentation.
Shareholders approved each of the key proposals on the equity raise and the conversion of bond debt and lessor claims with more than 95% of the vote, Norwegian said.