Norwegian shareholders vote through 10bn kroner rescue plan
AFP/The Local - [email protected]
Published: 4 May, 2020 CET.
Updated: Mon 4 May 2020 16:07 CET
The shareholders of Norwegian Air Shuttle have voted overwhelmingly for a rescue package that will see them diluted to just 5 percent of the company's equity.
With their approval, the struggling airline has leapt a crucial hurdle in its battle to stay afloat through the Covid-19 pandemic.
The rescue plan includes the conversion of around 10 billion Norwegian kroner ($961 million or 880 million euros) of debt held by bondholders and leasing companies into equity.
It will be followed a capital increase of between 300 and 400 million kroner. Shareholders approval also opens the way for a further tranche of government support, which was conditional on the airline reducing debt through an equity swap.
The measures will enable Norwegian to meet the government's conditions for granting 2.7 billion kroner in guarantees, on top of the 300 million kroner already allocated.
Failure to obtain the funds would have resulted in bankruptcy for the airline, which has already cut 4,700 staff.
On Sunday, chief executive Jacob Schram had urged shareholders to "use their voting rights and say yes.
"Otherwise, the fairy tale is over", he told broadcaster NRK.
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According to the Dagens Næringsliv newspaper, more than 95 percent of existing shareholders overwhelming voted for each of the three proposals -- the share issue, the bonds-for-equity swap and the leasing-debt-for-equity swap -- each of which needed a two-thirds majority to pass.
The airline's management were fighting right up to Sunday to win the approval of holders of $275m in bonds for the debt-to-equity swap, after they dramatically voted down the package on Thursday.
As a pioneer of long-distance low cost flights, Norwegian is paying the price for an ambitious expansion gamble that has left the company with substantial debt.
Accumulating losses over the last three years, the company's woes have been amplified by the new coronavirus pandemic, which has crippled air traffic worldwide. Almost all of Norwegian's fleet has been grounded for weeks.
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With their approval, the struggling airline has leapt a crucial hurdle in its battle to stay afloat through the Covid-19 pandemic.
The rescue plan includes the conversion of around 10 billion Norwegian kroner ($961 million or 880 million euros) of debt held by bondholders and leasing companies into equity.
It will be followed a capital increase of between 300 and 400 million kroner. Shareholders approval also opens the way for a further tranche of government support, which was conditional on the airline reducing debt through an equity swap.
The measures will enable Norwegian to meet the government's conditions for granting 2.7 billion kroner in guarantees, on top of the 300 million kroner already allocated.
Failure to obtain the funds would have resulted in bankruptcy for the airline, which has already cut 4,700 staff.
On Sunday, chief executive Jacob Schram had urged shareholders to "use their voting rights and say yes.
"Otherwise, the fairy tale is over", he told broadcaster NRK.
READ ALSO:
According to the Dagens Næringsliv newspaper, more than 95 percent of existing shareholders overwhelming voted for each of the three proposals -- the share issue, the bonds-for-equity swap and the leasing-debt-for-equity swap -- each of which needed a two-thirds majority to pass.
The airline's management were fighting right up to Sunday to win the approval of holders of $275m in bonds for the debt-to-equity swap, after they dramatically voted down the package on Thursday.
As a pioneer of long-distance low cost flights, Norwegian is paying the price for an ambitious expansion gamble that has left the company with substantial debt.
Accumulating losses over the last three years, the company's woes have been amplified by the new coronavirus pandemic, which has crippled air traffic worldwide. Almost all of Norwegian's fleet has been grounded for weeks.
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