OSLO: As part of the restructuring proposal, the Norwegian Air Shuttle contemplates a capital raise of up to NOK 6.0 billion.
The capital raise comprises of an offering of new capital perpetual bonds raising gross proceeds of up to NOK 1.875 billion; a rights issue raising gross proceeds of up to NOK 395 million; and a private placement of new shares limited to an amount so that the total gross proceeds from the capital raise will not exceed NOK 6,000 million.
The Board of Directors of the Company has today resolved the terms of the Capital Raise as follows:
- The New Capital Perpetual Bonds Offering
- The New Capital Perpetual Bonds Offering will raise gross proceeds to the Company of up to NOK 1,875 million and will be directed towards Eligible New Capital Perpetual Bonds Creditors as defined in the Restructuring Proposal.
The Company has received subscriptions from certain Eligible New Capital Perpetual Bonds Creditors for an amount exceeding NOK 1,875 million.
The terms and conditions for the New Capital Perpetual Bonds Offering are included in the Restructuring Proposal and in the announcement made by the Company on 11 March 2021, and will be further detailed in a bond agreement based on the standard Nordic Bond Terms for corporate high yield bonds.
The Rights Issue
As resolved by the extraordinary general meeting of the Company held on 17 December 2020, and on terms further resolved by the Board of Directors of the Company, the Rights Issue will comprise an offering of up to 63,076,638 new shares (the “Rights Issue Offer Shares”) at a subscription price of NOK 6.26 per Rights Issue Offer Share. The Rights Issue will, if it is fully subscribed, raise gross proceeds to the Company of approximately NOK 395 million.
Each existing shareholder will be granted 3 subscription rights for every 2 existing shares registered as held by the shareholder as of the expiry of 4 May 2021 (as registered in the VPS on 6 May 2021 (the “Record Date”)). The number of subscription rights granted to each existing shareholder will be rounded down to the nearest whole subscription right.
The first day of trading without the right to receive subscription rights will be 5 May 2021. Each subscription right will, subject to applicable securities laws, give the right to subscribe for and be allocated one Rights Issue Offer Share in the Rights Issue. The Subscription Rights are expected to be listed and tradable on the Oslo Stock Exchange under the ticker code “NAST” from 09:00 hours (CEST) 7 May 2021 to 16:30 hours (CEST) on 19 May 2021. Oversubscription and subscription without Subscription Rights will be permitted; however, there can be no assurance that Rights Issue Shares will be allocated for such subscriptions.
The full terms and conditions for the Rights Issue will be included in a prospectus prepared by the Company which will be published prior to the commencement of the subscription period for the Rights Issue, expected to take place from 7 May 2021 to 21 May 2021 at 16:30 CEST, subject to approval of the prospectus by the Norwegian Financial Supervisory Authority.
The Private Placement
The Private Placement will comprise an offering of up to 958,466,453 new shares (the “Private Placement Offer Shares”) at a subscription price of NOK 6.26 per Private Placement Offer Share. The gross proceeds raised in the Private Placement will be limited to an amount securing that the total gross proceeds from the Capital Raise will not exceed NOK 6,000 million.
The Private Placement will comprise:
(i) an institutional offering (the “Institutional Offering”), in which Private Placement Offer Shares will be offered to (a) institutional and professional investors in Norway, (b) investors outside Norway and the United States, subject to applicable exemptions from any prospectus and registration requirements, and (c) investors in the United States who are QIBs (as defined in Rule 144A under the U.S Securities Act) in transactions exempt from registration requirements under the US Securities Act. The Institutional Offering is subject to a lower limit per application of NOK 2,500,000, and
(ii) an offering directed towards Eligible Private Placement Creditors (as defined in the Restructuring Proposal) of the Company (the “Eligible Private Placement Creditor Offering”) subject to an upper limit per application of 50% of the relevant Eligible Private Placement Creditor’s Relevant Portion (as defined in the Restructuring Proposal) (i.e. maximum NOK 1,250,000 for creditors with a Claim of NOK 2,500,000).
Each Eligible Private Placement Creditor shall be given a preferential allocation in the Private Placement up to the amount of their respective Investment Allowances (as defined in the Restructuring Proposal). Allocations in the Institutional Offering will be made at the sole discretion of the Board of Directors of the Company in consultation with the managers.
Certain cornerstone investors having provided long term support to the restructuring and the Capital Raise in times of significant uncertainty have undertaken to subscribe for and will be allocated shares for a total amount of NOK 2,855 million in the Private Placement. The cornerstone investors are as follows:
• Geveran Trading
• Sundt AS
• Ludvig Lorentzen and associates
• DNB Asset Management
• Folketrygdfondet
• Nordea Investment Management
The Company will, in consultation with DNB Markets (a part of DNB), as global coordinator, determine the allocation of Shares in the Private Placement. The allocation principles may, in accordance with customary practice for institutional placements, include factors such as perceived investor quality, investment horizon and history, sector knowledge, size and timeliness of the application, contribution to the Restructuring through personal involvement or otherwise, including through employment or other engagement in the Company, each of which the Company may in its discretion consider and the Company will reserve the right to reduce or reject any application for shares in the Private Placement and also to set a maximum allocation per applicant, a maximum number of applicants or decide to make no allocation to any applicant (the “Allocation Principles”), provided that the Allocation Principles shall not be used to reduce or reject any application from an Eligible Private Placement Creditor in respect of its entitlement pursuant to the Restructuring Proposal.
Dividend Claims
Dividend Claim Creditors (as defined in the Restructuring Proposal) will receive a dividend equal to 5% of their relevant unsecured debt which shall be satisfied by i) a cash dividend from a fixed pot of NOK 500 million and ii) conversion of the balance into a Dividend Claim (as defined in the Restructuring Proposal).
Subject to the option of the Dividend Claim Creditors to opt out of the conversion to shares and/or the Structured Sales Process (as defined and determined in the Restructuring Proposal), the Dividend Claims will be converted into up to 233,548,229 shares 60 days after the Effective Time and shall subsequently be sold in the market by the managers by way of a structured sales process, the structure of which shall be determined by the managers in their discretion with the aim to maximizing the average sales price of the conversion shares within a reasonable time period, based on liquidity and other market factors.
After completion of the Capital Raise, and assuming that it is fully subscribed at the maximum transaction size of NOK 6,000 million and that NOK 1,875 million is raised in the New Capital Perpetual Bonds Offering, the estimated pro-forma ownership of the Company’s share capital on a fully diluted basis will be as follows; i) investors in the Capital Raise will own approximately 75.7%, ii) unsecured creditors will own approximately 20.6% through conversion of Dividend Claims, and ii) existing shareholders will own approximately 3.7%.
The Board has considered the structure of the contemplated offering of new shares in light of the equal treatment obligations under the Norwegian Public Limited Companies Act, the Norwegian Securities Trading Act and the rules on equal treatment under Oslo Rule Book II for companies listed on the Oslo Stock Exchange and the Oslo Stock Exchange’s Guidelines on the rule of equal treatment, and is of the opinion that the proposed capital raise is in compliance with these requirements in light of the current situation of the Company and the Restructuring Proposal.
The Company considers it to be in the best interest of its shareholders that the Capital Raise is partly structured as a private placement in order to reduce the risk of not being able to satisfy the conditions for effectiveness of the Restructuring Proposal. Accordingly, the existing shareholders preferential rights to subscribe for new shares in the Private Placement will be deviated from. Existing shareholders in the Company as registered in the VPS on the Record Date will however receive subscription rights to participate in the Rights Issue.
DNB Markets, a part of DNB Bank ASA, is acting as Sole Global Coordinator and Joint Bookrunner for the Capital Raise and ABG Sundal Collier ASA is acting as Joint Bookrunner. Seabury Securities ltd serves as financial advisor for the Capital Raise. Advokatfirmaet BAHR AS is acting as legal counsel to the Company. Advokatfirmaet Thommessen AS is acting as legal counsel to the managers.
On 28 April 2021 the United States Bankruptcy Court of the Southern District of New York has granted the recognition motion of Norwegian Air Shuttle ASA and Arctic Aviation Assets DAC pursuant to chapter 15 of the US Bankruptcy Code.
Subject to completion of the Restructuring Proposal and based on the voluntary restructuring in May 2020, the Company has since the end of 2019 reduced total debt by approximately NOK 63 – 65 billion and terminated aircraft orders of approximately NOK 85 billion in aggregated value.
The Company has negotiated and signed agreements for 4 owned and 44 leased aircraft and intends to operate the fleet on a short-haul network primarily in Norway and the Nordics or from Norway/the Nordics to Continental Europe.
An additional 3 aircraft are under documentation to be retained and leased. All 51 aircraft will be operated based on “Power by the Hour” agreements through Q1 2022 which significantly increase the Company’s flexibility and limit lease payments in the event of a prolonged period with challenging markets due to the COVID-19 pandemic.
The Company’s total liabilities upon completion of the Restructuring Proposal will be approximately NOK 16 – 18 billion, of which NOK 5.8 – 6.3 billion is aircraft related debt. The Company’s cash balance (including restricted cash) upon completion of the Restructuring Proposal is estimated to be approximately NOK 7 billion. These estimates are based on the assumption that the maximum proceeds are raised in the Capital Raise.
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