Norwegian Air Shuttle launches NOK 3 billion rights issue

Lauren Eldershaw
By Lauren Eldershaw January 29, 2019 10:43

Norwegian Air Shuttle launches NOK 3 billion rights issue

Norwegian Air Shuttle ASA has launched a fully underwritten rights issue of NOK 3 billion to strengthen its balance sheet. The airline stated officially that the rights issuance was in order to “increase its financial flexibility and create headroom to the covenants of its outstanding bonds compared with the Company’s business plan”.

In the same announcement, the airline also shared its renewed focus on profitability and away from growth. To do that, the company says that it intends to reduce its capital expenditure by divesting aircraft, which would include postponing some deliveries, as well as improving operations to reduce costs by a minimum stated goal of NOK 2 billion in 2019. To achieve this, Norwegian says that it will optimise its base structure and route network and it will also be helped by “the agreement with Rolls-Royce related to compensation for the operational disruptions on its long-haul operations which was entered into in December 2018”.

“Norwegian has been through a period with significant growth. Focus going forward will increasingly be on cost savings and CAPEX reductions. We will now get in place a strengthened balance sheet that supports the further development of the company. With the strengthened balance sheet, the organization can now devote all its attention to further development of the company,” says CEO Bjørn Kjos.

According to its preliminary 2018 figures, Norwegian delivered revenues of approximately NOK 40.3 billion, EBITDA of approximately NOK -2.2 billion, EBITDA excl other losses/gains of NOK –1.2 billion, EBIT of approximately NOK -3.8 billion and EBT of approximately NOK -2.5 billion in 2018. At the end of Q4 2018, the company had cash and cash equivalents of NOK 1.9 billion and equity position of NOK 1.7 billion.

The announcement also makes reference to the acquisition of a 4.61% stake by International Airlines Group (IAG) in April 2018. IAG publicly stated on January 24 that it had no interest in increasing its offer for the company and would be selling its stake. Norwegian reiterated its previous announcement that it had received two preliminary and non-binding conditional proposals from IAG to acquire all the shares in the company, which were rejected by Norwegian as being undervalued. The airline said that while negotiations were ongoing on selling shares in the company, it wasn’t able to raise more funds. It further confirmed that no more discussions are currently ongoing.

Norwegian’ largest shareholders, Bjørn Kjos, Chief Executive Officer, and Bjørn Halvor Kise, Chairman of the Board, have pre-committed to subscribe for NOK 343 million in aggregate of the new rights issuance through HBK Holding (NOK 300 million) and Sneisungen (NOK 43 million). Certain other larger shareholders have pre-committed and underwritten NOK 267 million.

The remaining NOK 2,390 million of the rights issue is underwritten by DNB Markets, Sterna Finance, and Danske Bank. DNB Markets is the sole global coordinator and joint bookrunner for the rights issue. Arctic Securities and Danske Bank are acting as joint bookrunners for the rights issue.

Lauren Eldershaw
By Lauren Eldershaw January 29, 2019 10:43