NOT FOR DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, HONG KONG OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.
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Reference is made to the previous stock exchange announcements by Norwegian Air Shuttle ASA (the “Company”) regarding its recapitalization, which includes the conversion of a substantial part of the Company’s bonds and lease obligations into equity (the “Debt Conversion”) and share offering with gross proceeds of NOK 400 million (the “Offering”), as further described in the Company’s prospectus dated 5 May 2020 (the “Prospectus”).
The conditions for the completion of the Debt Conversion and the Offering have now been satisfied and the share capital increases pertaining to the Debt Conversion and the Offering have been registered in the Norwegian Register of Business Enterprises (Nw. Foretaksregisteret).
The conditions precedent for the for the State Aid Package Tranche 2 and Tranche 3 have been fulfilled, including achieving a minimum 8 percent pro forma equity ratio. By considering the latest published quarterly report of the Company, being the fourth quarter 2019 interim financial statements, and including adjustments for the Debt Conversion and the Offering as if the transactions occurred at 31 December 2019, and disregarding any other currency or accounting effects subsequent to that date, the Company achieved a pro forma adjusted equity ratio of 17 percent.
“This has been a very challenging process with parallel negotiations and a lot of moving parts with constant dialogue and negotiations for more than two months. The negotiations have been tough, but constructive with significant contributions from all stakeholders. These are extraordinary circumstances and we have experienced an increasing degree of support and understanding and are satisfied that we have reached this milestone”, said CFO Geir Karlsen.
“I want to thank everyone who has supported the Company during this unprecedented crisis that has affected the entire airline industry: The Government and Parliament; customers; employees; shareholders; leasing companies; creditors; bondholders, the travel industry and other Norwegian supporters. Now that we get access to the state loan guarantee, we can continue to transform the Company. Through this process, the belief in New Norwegian and the Company’s strategy have been confirmed by shareholders, the market, bondholders, leasing companies, other creditors and lenders. Nevertheless, the months ahead will remain challenging and with a high degree of uncertainty for the industry. Norwegian will still need to collaborate closely with a number of creditors as the Company currently has limited revenues”, said CEO Jacob Schram.
Satisfaction of conditions for completion of the Offering and the Debt Conversion
The conditions for completion of the share capital increases pertaining to the issue of the offer shares in the Offering (the “Offer Shares”) and issue of the conversion shares (“Conversion Shares”) and perpetual bonds (the “Perpetual Bonds”) in the Debt Conversion, as described in the Prospectus, are satisfied.
Conversion of lease obligations
A total amount of NOK 9,074,297,386 of lease obligations have been converted into approximately 1,691 million Conversion Shares at a conversion price of NOK 4.24919 per share (the “Conversion Price”) and Perpetual Bonds, which are convertible into approximately 445 million new shares at the Conversion Price (subject to certain Euro-market standard anti-dilution provisions). See section 5.5 of the Prospectus for a further description of the Perpetual Bonds.
The referenced NOK 9,074,297,386 of lease obligations converted includes interest accrued on the debt being converted until and including the last interest payment date.
Commencing 1 July 2020, the corresponding lease payments will be reduced with approximately USD 12 million per month (including USD 0.9 million per month from aircraft which the Company and its subsidiaries have agreed with the lessors to redeliver before the end of this year).
The referenced amount of lease obligations to be converted excludes shares that may be issued under the so-called ‘power by the hour’ (“PBH”) arrangement until March 2021. The maximum amount of liabilities to be converted under the PBH, assuming no utilization of the aircraft until March 2021, is USD 300 million. The amount of liabilities to be converted under the PBH based on utilization of the aircraft in line with the Company’s business plan is estimated to be in the range USD 250 to USD 285 million.
The Company and its subsidiaries have also agreed with its individual lessors to redeliver three aircraft prior to the contractual redelivery dates. For the avoidance of doubt, the net present value of cancelled lease payments from July 2020 onwards associated with such redeliveries will not form the basis for further conversion into equity.
Conversion Shares and Perpetual Bonds subscribed for by lessors in the Debt Conversion shall be subject to a lock-up mechanism, as further described below.
Conversion of bonds
A total of NOK 3,581,522,206 (excluding NOK 59,346,376 representing bonds held by the Company) of bond debt has been converted into approximately 815 million Conversion Shares at the Conversion Price and Perpetual Bonds, which are convertible into approximately 28 million new shares at the Conversion Price (subject to certain Euro-market standard anti-dilution provisions). See section 5.5 of the Prospectus section 5.5 for a further description of the Perpetual Bonds.
The conversion amount is based on a net present value calculation of reduced cash flows for the individual bonds following the recapitalization. The principal amount in NAS07, NAS08 and the convertible bond will be reduced with NOK 3,142 million on an aggregate basis and NOK 1,423 million, NOK 500 million and NOK 1,219 million, respectively for the three bond loans.
For NAS07: 50 percent of the principal amount held by each bondholder has been converted to Conversion Shares and Perpetual Bonds at an implied conversion price of EUR 0.31145.
For NAS08: 50 percent of the principal amount held by each bondholder has been converted to Conversion Shares and Perpetual Bonds at an implied conversion price of SEK 3.61653.
For the CB: 77 percent of the principal amount held by each bondholder has been converted to Conversion Shares at an implied conversion price of USD 0.36299.
Conversion Shares and Perpetual Bonds subscribed for by bondholders in the Debt Conversion shall be subject to a lock-up mechanism, as further described below.
Additional conversion
As described in the Prospectus, the Company may also convert additional debt into equity. As per 31 March 2020, the Company had overdue payables of NOK 1,715 million. The number of shares that may be issued to vendors and others are not included in the figures above.
State Aid Package
The Company has entered into a NOK 2,992 million state supported term facility agreement arranged by DNB Bank ASA (“DNB”). Garantiinstituttet for eksportkreditt (“GIEK”) acts as guarantor according to the state guarantee scheme with liability (including interest) limited to NOK 2.7 billion. DNB and Bank Norwegian AS act as lenders in the commercial risk tranche of NOK 300 million relevant for Tranche 2 and 3, whereof Bank Norwegian AS provided NOK 24 million.
The facility is unsecured, non-amortizing and matures on 31 March 2022.
Completion of the Offering
The Company has issued 400 million Offer Shares at a subscription price of NOK 1 per Offer Share in the Offering, raising gross proceeds of NOK 400 million.
Payment for the allocated Offer Shares was due on 19 May 2020 in the retail offering and settlement is expected take place today (20 May 2020) for the institutional offering, in accordance with the payment procedures described in the Prospectus.
The Offer Shares will be tradeable on Oslo Stock Exchange from and including today (20 May 2020), subject to timely payment by the relevant investors. Depending on the policy of investors’ respective bank or investment firm, investors wanting to trade their allocated Offer Shares through an internet account prior to delivery (subject to timely payment being made) of the Offer Shares (expected to take place on 22 May 2022), may be prevented from such trading.
The Offer Shares issued in the Offering are to be recorded on the Company’s regular ISIN NO 001 0196140.
Lock-up
Conversion Shares shall be subject to lock-up. Approximately 268 million Conversion Shares, to be recorded on a temporary and separate ISIN NO 001 0882772, shall be released from lock-up on 15 June 2020. The remaining Conversion Shares shall be released from lock-up on 9 August 2020 (to be recorded on a temporary and separate ISIN NO 001 0882780), 9 October 2020 (to be recorded on a temporary and separate ISIN NO 001 0882798) and 9 December 2020 (to be recorded on a temporary and separate ISIN NO 001 0882806) as further described sections 5.3 and 5.4 of the Prospectus. Conversion Shares are ordinary class shares in the Company and have for orderly purposes been temporarily recorded on separate ISIN numbers as per above, and will be merged with the Company’s regular ISIN upon expiry of the relevant lock-up periods.
The Perpetual Bonds shall be recorded on separate ISINs and shall be subject to the same lock-up periods until 9 August 2020, 9 October 2020 and 9 December 2020, in respect of both transfers and conversion rights. The Perpetual Bonds will initially not be listed. The Company shall apply for listing of the Perpetual Bonds after the expiry of the lock-up periods.
There are certain exceptions to the lock-up regulations as further described in sections 5.3 and 5.4 of the Prospectus.
Shares converted under the existing remaining convertible bond of USD 34.5 million will not be subject to lock-up.
ABG Sundal Collier ASA, Danske Bank, Norwegian branch and DNB Markets, a part of DNB Bank ASA, are acting as managers in the Offering (the “Managers”).
Advokatfirmaet BAHR AS is legal advisor to the Company. Advokatfirmaet Thommessen AS is acting as legal advisor to the Managers.
For more information, please contact:
Geir Karlsen, CFO, phone +47 916 08 332
Tore Østby, EVP Strategic Development, phone + 47 995 464 00
Martine Undeli Bekkelund, Investor Relations Officer, phone + 47 952 60 728
Important information
The release is not for publication or distribution, in whole or in part directly or indirectly, in or into Australia, Canada, Japan or the United States (including its territories and possessions, any state of the United States and the District of Columbia). This release is an announcement issued pursuant to legal information obligations, and is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. It is issued for information purposes only, and does not constitute or form part of any offer or solicitation to purchase or subscribe for securities, in the United States or in any other jurisdiction. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”). The securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the US Securities Act.
The Company does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into Australia, Canada, Japan or the United States.
Any offering of the securities referred to in this announcement will be made by means of a prospectus. This announcement is an advertisement and is not a prospectus for the purposes of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on prospectuses to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (as amended) as implemented in any Member State. Investors should not subscribe for any securities referred to in this announcement except on the basis of information contained in the aforementioned prospectus. Copies of any such prospectus will, following publication, be available from the Company’s registered office and, subject to certain exceptions, on the websites of ABG Sundal Collier ASA (www.abgsc.no), DNB Markets, a part of DNB Bank ASA (www.dnb.no/emisjoner) and Danske Bank, Norwegian Branch (www.danskebank.no/nas) (jointly, the “Managers”).
The issue, subscription or purchase of shares in the Company is subject to specific legal or regulatory restrictions in certain jurisdictions. Neither the Company nor the Managers assume any responsibility in the event there is a violation by any person of such restrictions. The distribution of this release may in certain jurisdictions be restricted by law. Persons into whose possession this release comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
The Managers are acting for the Company and no one else in connection with the offering and will not be responsible to anyone other than the Company providing the protections afforded to their respective clients or for providing advice in relation to the offering and/or any other matter referred to in this release.
Forward-looking statements: This release and any materials distributed in connection with this release may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect the Company’s current expectations and assumptions as to future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.
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