Aercap and BOC Aviation have become the largest shareholders in Norwegian following the completion of the carrier’s debt-to-equity conversion.
Aercap has acquired almost 16% of shares in the Scandinavian carrier after converting debt into 487,931,515 ordinary shares.
In addition, the lessor is taking perpetual bonds in the airline which can be converted into 219,481,962 ordinary shares, representing 7.2% of the total.
BOC Aviation now holds 12.67% of shares in Norwegian after agreeing to convert lease obligations owed into 389,053,742 shares, the airline stated in a stock market disclosure.
The perpetual bonds can be converted in stages, with a third convertible on 9 August, another third from 9 October 2020 and the final tranche on 9 December. The conversion right expires after five years.
A full list of shareholders in the airline has not yet been disclosed, but Airfinance Journal understands the two lessors are now the largest holders.
Avolon, AMCK Aviation and FPG Amentum are among the lessors who have participated in the debt to equity programme, Airfinance Journal understands.
Norwegian has converted NOK12.7 billion ($1.3 billion) of debt to equity and completed a NOK400 million share offering to reach an equity ratio of 17%.
As a result it has qualified for NOK2.7 billion of Norwegian government-guaranteed loans.
Of the debt converted, more than NOK9 billion relates to rental payment debts, and interest accrued, owed to lessors.
These have been converted into approximately 1.7 billion shares at a conversion price of NOK4.25 per share and perpetual bonds, which are convertible into approximately 445 million new shares at the conversion price.
The lease debts to be converted exclude shares that may be issued under a ”power by the hour” arrangement until March 2021.
The maximum amount of liabilities to be converted under such arrangement, assuming no utilisation of the aircraft until March 2021, is $300 million.
Norwegian expects to convert between $250 million and $285 million of these liabilities through the arrangement.
From 1 July, lease payments will be reduced by approximately $12 million per month. This includes $900,000 per month from aircraft that the airline will redeliver to their owners before the end of this year.
Norwegian has negotiated to return three aircraft prior to their expiry dates.
A total of NOK3.58 million of bondholder debt has been converted into approximately 815 million shares at the conversion price and perpetual bonds, with a value of 28 million new shares.
As a result Norwegian has entered into a NOK3 billion term facility agreement arranged by DNB Bank. The state will guarantee up to NOK2.7 billion of the amount.
DNB and Bank Norwegian are acting as lenders in the “commercial risk tranche” of NOK300 million.
The facility is unsecured, non-amortising and matures on 31 March 2022.
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