OSLO (Reuters) – Norwegian Air’s (NWC.OL) shareholders began a pivotal meeting on Monday to vote on a plan to convert debt into equity and raise more cash that could determine whether the budget carrier survives the coronavirus pandemic.
The airline has won “strong support” from aircraft lessors for its plan, it said ahead of the online meeting, which is scheduled to last until 0830 GMT.
With 95% of its fleet grounded amid the COVID-19 outbreak, Norwegian Air could run out of cash by mid-May unless shareholders back the plan.
On Sunday it announced that bondholders had signed up to the plan after it was narrowly rejected in a vote on Thursday.
Norwegian said lessors are now willing to convert at least $730 million of debt into equity, up from $550 million announced earlier, and talks are ongoing for possible further conversion.
“With the significant contributions from lessors and bondholders, the company expects to convert more than 10 billion crowns ($958 million) in debt to equity,” it said in a statement.
Shareholders will also vote on a plan to raise 400 million crowns ($38.4 million) from the sale of new stock.
If successful, the debt conversion and share sale will allow the carrier to tap government guarantees of up to 2.7 billion Norwegian crowns, which hinge on a reduction in leverage, on top of 300 million crowns it has already received.
The plan will hand majority ownership to the airline’s creditors and could leave current shareholders with just 5.2% if they approve the plan, but there is no other alternative, CEO Jacob Schram told independent TV2.
“Without a yes (from shareholders), it will be game over,” Schram said.
The loan could keep Norwegian going until the end of 2020, although further cash may be needed later as Norwegian eyes a gradual ramp-up next year and normalisation in 2022, albeit with a reduced fleet.
Airlines around the world have been hit hard by the impact on travel of the pandemic, with many forced to turn to governments for state aid to avoid bankruptcy.
Norwegian Air is only paying invoices vital to maintaining minimum operations, such as salaries for staff still employed and critical IT infrastructure. It has put payments for ground handling, debt and leases on hold.
The Oslo Bourse said it had halted trade in Norwegian’s shares until the outcome of the vote is presented.
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