Norwegian Air shareholders approve $1bn rescue plan
Norwegian Air’s shareholders have approved a $1bn (£800m) rescue plan by an overwhelming margin this morning, paving the way for the embattled airline to tap government funding of up to 2.7bn krone (£320m).
Under the scheme, which was backed by 95 per cent of shareholders, nearly $1bn of the company’s debt will be converted into equity.
Shareholders supported the scheme even though doing so will leave them with ownership of just 5.2 per cent of the company.
Shares in the company rose 30 per cent on the announcement, which means the firm will have enough cash to keep going until the end of the year.
Many had been sceptical about Norwegian’s chances of survival due to its hefy debt pile, which it accrued due to rapid expansion into the low-cost and transatlantic markets.
However, after the firm’s bondholders approved the agreement on Sunday, the airline can now raise the equity it requires to access the government’s loans.
Norwegian said lessors are now willing to convert at least $730m of debt into equity, up from $550m earlier, with talks regarding further conversion ongoing.
“With the significant contributions from lessors and bondholders, the company expects to convert more than 10bn krone in debt to equity,” it said.
Norwegian will now proceed with the conversion of bonds and lease debt to shares, as well as the public offering of up to 400m krone from the sale of new stock, it said.
The low-cost carrier is currently only operating a small number of domestic flights, with all but seven of its planes grounded.
Last week it warned that the majority of its fleets could remain grounded until April 2021 depending on international travel advice.
According to a plan shared before the crunch votes, Norwegian is aiming to ramp up services towards a normal level in 2022.