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Fornebu, Norway – 5 November 2019.
Norwegian Air Shuttle ASA (the “Company”) contemplates a private placement (the “Private Placement”), including up to 27,250,000 new shares (the “New Offer Shares”), and a convertible bond issue of up to USD 175 million (the “Convertible Bond Issue”). After the completion of the transactions, Norwegian is fully funded through 2020 and beyond based on the current business plan. The proceeds from the sale of the New Offer Shares in the Private Placement and from the Convertible Bonds Issue will secure required financing of working capital during the winter season and create headroom to financial covenants while completing the strategic transformation of the Company.
Reference is made to Q3 2019 presentation of the Company published on 24 October 2019. Norwegian’s change in strategy from growth to profitability has resulted in strong operational improvements. Profits in Q3 2019 were the highest ever. The Company has taken several actions to increase liquidity and reduce capital commitments:
• Restructured aircraft orders which reduce capital expenditures by NOK 22.0 billion for 2019 and 2020.
• Established a joint venture with China Construction Bank Leasing (International) Corporation DAC, which reduces capital commitments in 2020 to 2023 by another NOK 13.7 billion.
• Sold 24 aircraft with delivery in 2019 and 2020 with net liquidity effect of NOK 2.2 billion.
• Sold shares in Norwegian Finans Holding ASA for a total NOK 2.2 billion.
• The maturity of our unsecured bonds has been extended with two years compared to original maturity dates.
In addition, the Company has raised the full-year target for the cost reduction program #Focus2019 to NOK 2.3 billion. On the commercial side, Norwegian has announced the intent to enter into a partnership with JetBlue to build feeder traffic in the U.S. market.
“Despite our actions showing good results to date, several external factors have impacted our liquidity position. The working capital has been negatively impacted by a reduction in credit card acquirer capacity. The engine issues related to our 787 Dreamliners and the grounding of the 737 Max aircraft have resulted in extra wet-lease costs of NOK 1.5 billion. The actions we are now taking, are necessary to create financial headroom to make sure that we have sufficient liquidity as we enter the next chapter of Norwegian,” said acting CEO Geir Karlsen.
The Company has retained DNB Markets, a part of DNB Bank ASA, Pareto Securities AS and Arctic Securities AS as Joint Bookrunners (together the “Equity Managers”) to advise on and carry out the contemplated Private Placement of new and existing shares in the Company. Through the Private Placement, the Company is offering up to 27,250,000 new shares (the New Offer Shares), which correspond to approximately 19.9 per cent of the Company’s current share capital, and up to 12,500,000 existing shares (which is to be lent to and sold by certain investors in the Convertible Bond Issue for hedging purposes) (the “Hedging Shares”, together with the New Offer Shares, the “Offer Shares”).
In addition, the Company has retained Clarksons Platou Securities AS (the “Bond Manager”) to advise on and carry out the contemplated Convertible Bond Issue by the Company. Through the Convertible Bond Issue, the Company is offering convertible bonds (the “Convertible Bonds”) with base size of up to USD 150 million and an option to increase by up to another USD 25 million, giving a total issue size of up to USD 175 million.
Terms of the Private Placement
The offering price (the “Offering Price”) and the number of Offer Shares to be sold in the Private Placement will be determined through an accelerated bookbuilding process to be conducted by the Equity Managers.
The bookbuilding period in the Private Placement will commence today 5 November 2019 at 16:30 CET and is expected to close on 6 November 2019 at 08:00 CET. The Equity Managers and the Company may, however, at any time resolve to close or extend the bookbuilding period, or cancel the Private Placement in its entirety, at their sole discretion and on short notice.
The minimum application and allocation amount in the Private Placement has been set to the NOK equivalent of EUR 100,000. The Company may, at its sole discretion, allocate an amount below EUR 100,000 to the extent exemptions from prospectus requirements, in accordance with applicable regulations, are available.
The Private Placement will be directed towards existing shareholders in the Company and other Norwegian and international investors, subject to applicable exemptions from relevant registration, filing and prospectus requirements, and subject to other applicable selling restrictions.
Terms of the Convertible Bonds
The Convertible Bonds will carry a fixed interest, have a tenor of 5 years, be ranked senior unsecured, be guaranteed by Arctic Aviation Assets DAC (a 100 per cent directly owned subsidiary of the Company) and will, subject to the approval by the general meeting of the Company, be convertible into shares at a premium to the Offering Price. The interest rate and the conversion price will be finally determined through an accelerated bookbuilding process to be conducted by the Bond Manager.
The bookbuilding period for the Convertible Bond Issue will run in parallel with and on corresponding terms to the bookbuilding period for the Private Placement.
The minimum application and allocation amount in the Convertible Bond Issue will be USD 200,000.
The Convertible Bond Issue will be directed towards professional international and certain domestic investors, subject to applicable exemptions from relevant registration, filing and prospectus requirements, and subject to other applicable selling restrictions.
The shares in the Company to be used for hedging connected to the Convertible Bond, up to 12,500,000 shares which are currently owned by HBK Holding AS and Folketrygdfondet and being lent to certain investors in the Convertible Bond, will be placed together with the Private Placement conducted by the Equity Managers, meaning that the total placement of shares in the transaction will include up to 39,750,000 shares. The Bond Manager is facilitating the share lending arrangement among institutional investors, and shareholders may contact the Bond Manager on further participation terms in the lending arrangements.
The allocation of Offer Shares in the Private Placement and the allocation of Convertible Bonds in the Convertible Bond Issue will be finally determined at the end of the bookbuilding process and will be made at the Board of Directors’ sole discretion. The Board of Directors will focus on criteria such as (but not limited to), existing ownership in the Company, price leadership, timeliness of order, relative order size, perceived investor quality, sector knowledge and investment horizon. Notification of conditional allocation of the New Offer Shares and the Convertible Bonds, and notification of allocation of the Hedging Shares will be sent to the applicants by the Equity Managers and the Bond Manager (collectively, the “Managers”) on or about 6 November 2019 and it is expected that the Company will announce the result of the Private Placement and the Convertible Bond Issue before opening of trading on the Oslo Stock Exchange, 6 November 2019. All investors who are allocated Offer Shares will as far as possible receive the same proportion of New Offer Shares and Hedging Shares.
The completion of the Private Placement related to the New Offer Shares is subject to (i) completion of the Convertible Bond Issue, (ii) the Board of Directors resolving to allocate Offer Shares in the Private Placement and Convertible Bonds in the Convertible Bond Issue and to proceed with the Private Placement and the Convertible Bond Issue, (iii) and the resolution by the Company’s extraordinary general meeting (the “EGM”) expected to be held on or about 27 November 2019 to issue the New Offer Shares and the Convertible Bond and carry out the Subsequent Offering (should the Board of Directors so propose), and (iv) registration of the share capital increase of the Company pertaining to the Private Placement and the Convertible Bond with the Norwegian Register of Business Enterprises and the Norwegian Central Securities Depositary (“VPS”). The completion of the Private Placement related to the Hedging Shares is only subject to the board of directors’ resolution to proceed with the Convertible Bond, irrespective of whether the Convertible Bond is subsequently approved by the EGM (together with (i) to (iv) above referred to as the “Conditions”).
The Equity Managers expect to issue notifications with payment instructions for the Private Placement immediately after the EGM with payment date on or about 29 November 2019. Allocated Offer Shares will be delivered as soon as practicable thereafter assuming all Conditions are met, expected on or about 3 December 2019. The New Offer Shares and the Hedging Shares will settle simultaneously but note that the lending and subsequent sale of the Hedging Shares is not subject to approval by the EGM.
By participating in the Private Placement, existing shareholders irrevocably undertake to vote for its shares in favor of the resolution(s) proposed to implement the Private Placement, the Convertible Bond Issue and the potential Subsequent Offering at the EGM. The largest shareholder in the Company, HBK Holding AS, has communicated its support for the proposals at the EGM.
The completion of the Convertible Bond Issue is subject to (i) the Private Placement being fully subscribed, (ii) the due execution of all necessary corporate resolutions for the approval and issuance of the Convertible Bonds and the documentation in connection therewith by the Issuer. The terms of the Convertible Bonds will contain certain provisions which will apply in the event that the Convertible Bond Issue is not approved by the EGM. If the conditions set out in (i) and (ii) above are satisfied, it is expected that settlement of the Convertible Bond Issue will occur on or about 15 November 2019.
The Company’s Board of Directors has considered the Private Placement and the Convertible Bond Issue in light of the equal treatment obligations under the Norwegian Securities Trading Act and Oslo Børs’ Circular no. 2/2014 and is of the opinion that the transactions comply with the equal treatment obligations, in particular due to the fact that (i) in the current market, a private placement and a convertible bond have larger possibilities of success compared to a rights issue and, therefore, give the Company timely access to the new capital at low risk, and (ii) the cost of raising capital is assumed to be lower than in a rights issue. On this basis, the Board of Directors has considered the transactions to be in the common interest of the Company and its shareholders. As a consequence of the structure of the Private Placement and the Convertible Bond, the shareholders’ preferential rights will be deviated from in both issues.
The Company intends, subject to completion of the Private Placement and the Convertible Bond Issue, to conduct a subsequent offering of new shares in the Company at the same subscription price as in the Private Placement (the “Subsequent Offering”). Any such Subsequent Offering will, subject to applicable securities laws, be directed towards existing shareholders in the Company as of 5 November 2019 (as registered in the VPS on 7 November 2019) who (i) were not allocated Offer Shares in the Private Placement, and (ii) are not resident in a jurisdiction where such offering would be unlawful, or would (in jurisdictions other than Norway) require any prospectus, filing, registration or similar action.
For further information, please contact:
Tore Østby, EVP Strategic Development, phone: +47 995 46 400
Martine Undeli Bekkelund, IR Officer, phone: +47 952 60 728
Important Notices
This document is not an offer to sell or a solicitation of offers to purchase or subscribe for shares or bonds. Copies of this document may not be sent to jurisdictions, or distributed in or sent from jurisdictions, in which this is barred or prohibited by law. The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, in any jurisdiction in which such offer or solicitation would be unlawful absent registration, or an exemption from registration or qualification under the securities laws of any jurisdiction.
This document is not for publication or distribution in, directly or indirectly, Australia, Canada, the Hong Kong Special Administrative Region of the People’s Republic of China, South Africa, New Zealand, Japan, the United States or any other jurisdiction in which such release, publication or distribution would be unlawful, and it does not constitute an offer or invitation to subscribe for or purchase any securities in such countries or in any other jurisdiction. In particular, the document and the information contained herein should not be distributed or otherwise transmitted into the United States or to publications with a general circulation in the United States of America.
This document is not an offer for sale of securities in the United States. Securities may not be offered or sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Company does not intend to register any part of the offering in the United States or to conduct a public offering in the United States of the shares to which this document relates.
In any EEA Member State, this communication is only addressed to and directed at qualified investors in that Member State within the meaning of the Prospectus Regulation (Regulation (EU) 2017/1129) (the “Prospectus Regulation”). In addition, in the United Kingdom, this document is not being distributed, nor has it been approved for the purposes of Section 21 of the Financial Services and Markets Act 2000 (“FSMA”), by a person authorized under FSMA and is directed only at persons who (i) are outside the United Kingdom, (ii) are investment professionals falling within Article 19(5) of the U.K. Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be engaged with, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to as “relevant persons”). Under no circumstances should persons who are not relevant persons rely or act upon the contents of this announcement. Any investment or investment activity to which this document relates in the United Kingdom is available only to, and will be engaged only with, relevant persons.
The information contained in this document does not purport to be comprehensive. None of the Managers, any of their respective subsidiary undertakings or affiliates, or their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for (whether in contract, tort or otherwise) or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this document (or whether any information has been omitted from the document) or any other information relating to the Company, its subsidiaries, affiliates or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. The Managers disclaim any responsibility for any acts or omissions of the Company, any of the directors, or any other person in connection with the Private Placement and the Convertible Bond Issue.
The Equity Managers are acting for the Company in connection with the Private Placement and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the Private Placement or any transaction or arrangement referred to in this press release.
The Bond Manager is acting for the Company in connection with the Convertible Bond Issue and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the Convertible Bond Issue or any transaction or arrangement referred to in this press release.
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and © local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the securities described in this press release have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of non-professional, professional and eligible counterparties; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, distributors should note that: the price of the securities may decline and investors could lose all or part of their investment; the securities offer no guaranteed income and no capital protection; and an investment in the securities is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the transactions. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Managers will only approach investors who meet the criteria of professional clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the securities. Each distributor is responsible for undertaking its own target market assessment in respect of the securities and determining appropriate distribution channels.
This document may include forward-looking statements. The words “believes”, “expects”, “may”, “will”, “seek”, “would”, “could”, “should”, “shall”, “risk”, “intends”, “estimates”, “aims”, “plans”, “predicts”, “continues”, “assumes”, “positioned” or “anticipates” and similar expressions (or their negative) identify certain of these forward-looking statements. These forward-looking statements are statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which the Company operates. The forward-looking statements in this document are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company’s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of regulators and other factors such as the Company’s ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. The Company and each of the joint financial advisors expressly disclaim any obligation or undertaking to release any updates or revisions to these forward-looking statements to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based after the date of this document or to update or to keep current any other information contained in this document. Accordingly, undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this document.
This information is subject to a duty of disclosure pursuant to Section 5-12 of the Norwegian Securities Trading Act.
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