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Norwegian Air submits final offer to creditors

Thu 11 March 2021 10:38 | A A A

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(Sharecast News) - Norwegian Air submitted its final restructuring offer to creditors and shareholders on Thursday as the company moves to slash debt and reduce its fleet.

The restructuring plans, which come as a way for the airline to survive the crisis caused by the coronavirus pandemic and government travel restrictions, will allow Norwegian to raise new capital and emerge from bankruptcy protection in Ireland and Norway.

Norwegian expects to slash debt to around NKR 20bn down from its massive NKR 66.8bn burden.

Chief executive Jacob Schram said he was was confident that the plan would be approved: "The Examiner in Ireland and the Reconstructor in Norway both believe that this plan is in the interest of the creditors and shareholders of the company. This is an important milestone in the process of securing Norwegian's future."

"It is hoped that the Irish High Court will make their final decision within the next couple of weeks," said Chief financial officer Geir Karlsen.

A separate process in a Norwegian court will follow the Irish proceedings. If the plan is approved by the courts in the coming weeks, the company can continue the reconstruction processes and initiate a capital raise in April. Norwegian is targeting completion in May.

The airline expects to raise NKR 4bn t- NKR 5bn crowns from new shares and hybrid capital. New investors will receive approximately 70% of the post-restructuring share capital, creditors will get about 25% and current shareholders approximately 5%.

Creditors with unsecured claims will receive about 5% of the original amount owed in cash and a new debt obligation.

The dividend claims may be converted to shares, in total representing approximately 25 percent of the company's share capital following the restructuring, said the company in a statement.

Up until now, Norwegian served routes across Europe and flying to North and South America, Southeast Asia and the Middle East.

In January this year, the airline cut its long-haul business and have left a slimmed-down airline which focuses on travel within Europe. Around 2,000 jobs were axed as a result.

Its fleet is set to be cut to 53 jets down from 140 existing before the pandemic although it expects to raise that number to 70 jets by 2022.

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