Scandinavian budget carrier Norwegian is exercising a call option on a package of outstanding bonds valued at NKr1.5 billion ($143 million), with the government of Norway converting part of its holding to shares.
As part of the decision, the airline is planning to buy back up to 50% of the bonds at a fixed price of 140% of their nominal value.
Norway’s government has already agreed to sell half of its bonds, with a face value of nearly NKr616 million, and will take a 6.37% share of the company upon conversion.
The government, which holds the bonds through the ministry of trade, industry and fisheries, acquired them as part of a 2021 rescue loan agreement for the airline during the Covid-19 pandemic. Once purchased, the bonds will be cancelled.
According to the ministry, the government will receive NKr862.4 million in proceeds as a result of the 140% payment.
“Norwegian is now in a position where they can repay the [rescue] loan, after the reconstruction and the subsequent work that the company has put in,” says trade minister Cecilie Myrseth. “The agreement we have made with Norwegian gives the state a significant gain.”
Bondholders wishing to sell their bonds will have until 16 May to submit a request.
Norwegian says it will attempt share the purchases proportionally based on how many bonds each party offers, although it adds that it could choose to buy fewer than offered.
Four sets of bonds are covered by the plan, two of which were issued in May 2021 and two in December 2021.
Norwegian’s exercising of the call option follows its disclosure of a reduction in first-quarter operating losses to NKr611 million.
The carrier acquired 10 previously-leased aircraft during the quarter, a decision which “positively” impacts the financial result and provides “recurring savings and more flexibility”.
“We continue on a positive trajectory in the year’s first quarter, and it is encouraging to see that our initiatives are yielding results on the cost side,” says chief executive Geir Karlsen.
The company has a fleet of 89 aircraft in its main Norwegian operation and another 51 with regional carrier Wideroe.
Norwegian contributed NKr568 million to the operating loss while Wideroe accounted for NKr43 million. The company’s overall revenues were up 7% to NKr6.6 billion.
