Norwegian Air to Tap Markets in Bid to Raise Over $300 Million
Norwegian Air to Tap Markets in Bid to Raise Over $300 Million
(Bloomberg) -- Norwegian Air Shuttle ASA, the debt-ridden low-cost airline, is returning to capital markets in a bid to raise potentially more than $300 million.
Norwegian is contemplating a private placement of as many as 27.25 million new shares, representing about 20% of its share capital. The company also wants to sell convertible bonds for as much as $175 million, it said in a statement. At Tuesday’s closing price, the new shares would be worth 1.255 billion kroner ($136 million).
It’s the second time Norwegian is selling new shares this year, after it got 3 billion kroner in a rights issue in March. The plan follows a series of measures intended to improve liquidity in recent months, including delaying aircraft orders, a sweeping cost-reduction program and bond amendments, as well as selling planes and eliminating investment commitments through the establishment of a joint venture.
The new transactions are needed to fund working capital during the airline’s winter season and create headroom to financial covenants, Norwegian said. Engine issues with its 787 Dreamliners and the grounding of the 737 Max have resulted in extra costs of 1.5 billion kroner.
“Despite our actions showing good results to date, several external factors have impacted our liquidity position,” said acting Chief Executive Officer Geir Karlsen. “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.”
Norwegian retained DNB Markets, Pareto Securities AS and Arctic Securities AS as joint bookrunners of the private placement, and Clarksons Platou Securities AS to advise on and carry out the bond issue.
Norwegian expects the transactions to make it fully funded through 2020 and beyond, based on its current business plan.
To contact the reporters on this story: Mikael Holter in Oslo at mholter2@bloomberg.net;Sveinung Sleire in Oslo at ssleire1@bloomberg.net
To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net
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