German and Swedish bondholders in Norwegian say they are ready to invest more than one billion fresh kroner in the airline. But before they do, they demand better conditions than they have been offered so far.
This weekend, the largest bondholders in Norwegian decided to revolt.
Then they got to choose one of theirs as a board member in the company Norwegian Air Norway AS (abbreviated NAN). It happened at a hastily convened general meeting of NAN on Saturday.
This subsidiary owns a number of landing rights (called castles) at Gatwick Airport in London. And the owners of Norwegian’s two largest bond loans again have a mortgage on the shares in NAN.
Since Norwegian’s bond loans have de facto defaulted, the owners of the loans have for several months had the right to act as if they were shareholders in this subsidiary.
However, they only declared default this weekend, and then demanded a board seat in the company.
However, bondholders are not going for a full revolution right away. For they did not take over the ownership of NAN and the mortgage.
In addition, the two Norwegian tops were still allowed to keep their board seats there.
Rebellion led by Lazarus
But the uprising of the largest bondholders is undoubtedly underway.
– This is just a first step, says Swedish Claes Jonson.
He is now a newly elected board member of Norwegian Air Norway. Jonson is a partner in the company Lazarus Industriförvaltning.
It is a Swedish consulting company that specializes in joining struggling companies.
However, Lazarus does not own bonds even in Norwegian. But he now works for German and Swedish funds.
Think new investors get too much
The bondholders believe that the new equity investors who will invest between NOK 2 and 3 billion in new shares in Norwegian are faring too well compared to themselves.
According to the plan, the new investors will be allowed to buy new shares in Norwegian for NOK 6.8 per share. action.
Today’s shareholders want the same, but for a smaller sum of NOK 400 million.
Today’s creditors, on the other hand, do not receive this offer. They are instead offered either to be left with only 5 percent of their unsecured claims, converted into shares in Norwegian, or to subscribe to a so-called hybrid loan.
This loan, which will be between NOK 1.5 and 2.5 billion, can be exchanged for shares only in 2023.
This is the last thing the state has said it is willing to do. Minister of Trade and Industry Iselin Nybø will invest NOK 1.5 billion in the hybrid loan. Then she will also get about 3 billion in previous guarantees for an interest-free loan of 2.25 billion kroner.
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Does not the state need?
But the Swedish and German bondholders now claim that there may be no need for government investment.
They say they are willing to turn up 100 million euros, just over 1 billion kroner in new capital. But only if they get better conditions than they have been offered so far.
– If one can find a solution where the state does not have to spend Norwegian taxpayers money, then it must be the best, Jonson asks.
He believes Norwegian has started at the wrong end, with a focus on bringing in new investors. They should instead agree with their creditors on a solution they can accept. And then go out and get money, Jonson thinks.
The bondholders are not willing to do as the state has said they are willing to do, to invest in the hybrid loan. As mentioned, the loan will at the earliest be able to be converted into shares in 2023. And then at a price that will be close to the share price when that time comes.
The bondholders believe that the new investors who are allowed to buy at a price of NOK 6.8 per share. now in the spring, then will run off with almost all the potential that now lies in the stock.
Requires the loans secured debt
But the German and Swedish investment companies that own most of the two bond loans that are now revolting will have more than better terms on any new capital they can put up with.
They will also have continued as still secured debt very much of the outstanding amount of a total of approx. NOK 1.8 billion in the two bond loans. That is, which debt Norwegian still has to service. But the latter Norwegian will again not accept.
The Norwegian reconstructor Håvard Wiker and the Irish examiner Kieran Wallace are now making calculations of the values of Norwegian’s various mortgages.
Can take the pledge and go
Norwegian and the bondholders who are now rebelling are thus very far apart. The unspoken threat from the bondholders is that they can decide to take over NAN at any time. And then also bring the castles.
But then the question is whether NAN, which has only one leased aircraft, will then be allowed to keep all the castles? In order to own these castles, NAN must be authorized by the British aviation authorities. Will bondholders gamble on it?
The value of the castles is undoubtedly greatest if they are retained by Norwegian. But the bondholders obviously believe that they are coming out of the airline’s rescue plan so poorly that it is a real alternative for them to take the castles from Norwegian.
They argue that Norwegian will also need to fly via Gatwick in the future, and that the castles will therefore be much more valuable in the long run for Norwegian than today.
And at the same time, they come up with a big carrot: If they get to invest on an equal footing with the new investors, they can turn up one billion kroner in new capital.
Quiet from Norwegian
Aftenposten / E24 does not succeed in getting any official comments from Norwegian on Sunday.
But from an unofficial point of view, it is said that the bondholders, by convening an extraordinary general meeting of Norwegian Air Norway this weekend, are kicking in an open door. That the bondholders had been offered a board seat a while ago.
– We had long hoped that Norwegian would come up with an offer that we could discuss with them. But that has not happened, says Jonson about the reason why they went into action earlier this weekend.
And quiet in the hangar
In the latest bond loan to Norwegian, the bondholders have a mortgage on a hangar at Gardermoen. In this loan there should be no rebellion.
But that may not be so strange. Because they are likely to keep much more of the loan outstanding that secured debt in Nye Norwegian.
The value of the mortgage in the hangar must be high for a Norwegian who now only invests in Norway and the Nordic countries.