Through the issuance of bonds and the sale of shares, Norwegian has raised over $700 million in capital to keep it alive and operating through the crisis. Expiring on May 21st, the airline offered three ways for investors to buy into the airline and inject some much-needed funding into the carrier.
Three avenues for investment offered
It was at the start of the month that Norwegian announced that it was hoping to raise at least NOK 6 billion ($720 million) in fresh capital. ch-aviation notes that this funding drive was part of the carrier’s plan to emerge from bankruptcy protection in Ireland and Norway.
On the table were three financial instruments for investors to support Norwegian’s drive to raise capital:
- An offering of new capital perpetual bonds with a total price tag of NOK 1.875 billion ($223.3 million).
- A rights issue raising NOK 395 million ($47 million).
- And a private placement of new shares to not exceed 6.0 billion ($714 million).
The subscription period for the Rights Issue and the application period for the private placement expired at 16:30 (CEST) on May 21st, 2021.
What was the outcome of the sales?
As per a statement issued at 17:18 (CEST) on May 21st, the following is the result of Norwegian’s capital drive:
- The airline received subscriptions for its new capital perpetual bonds for an amount exceeding NOK 1.875 billion ($223.3 million). These bonds are expected to be issued on or about May 26th, 2021, subject to conditions for completion.
- Norwegian received subscriptions for approximately 311 million new shares in its rights issue. Up to 63,076,638 new shares were offered at a subscription price of NOK 6.26 ($0.75) per share. This amounts to over $47 million. The airline says that the preliminary counting “consequently indicates an oversubscription of approximately 393%.”
- Finally, for its private placement, the airline sold 595,869,048 new shares at a subscription price of NOK 6.26 ($0.75) per share. This will raise gross proceeds to the airline of approximately NOK 3.73 billion ($444.3 million).
“Consequently, the Company will raise total gross proceeds of approximately [NOK 6.0 billion] in the Capital Raise,” Norwegian states. This is equivalent to roughly $714 million.
So what’s next?
According to Reuters, courts in Ireland and Norway had demanded that Norwegian raise at least NOK 4.5 billion ($536 million) before May 26th as part of a plan to emerge from bankruptcy protection in the two countries.
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The restructuring of the airline will see an end to its long-haul operations. Indeed, the revived carrier will be a shell of its former self, as it focuses mainly on Nordic and European routes.
Have you flown with Norwegian in the past? Are you hoping for the airline to make a full recovery and one day revive its long-haul operations? Let us know in the comments.