Scandinavian budget carrier Norwegian has called a shareholders’ meeting for 4 May to discuss plans to convert debt to equity, in order to meet criteria for the Norwegian government’s state guarantee scheme.

The airline is trying to secure NKr3 billion in funding but, while it has met the requirements for the first tranche of NKr300 million, it is proposing actions to meet those necessary for the second and third – respectively NKr1.2 billion and NKr1.5 billion.

To satisfy the equity conditions, Norwegian’s liabilities towards leasing companies, banks and other creditors would be converted in to shares.

There would be a partial or complete conversion of bonds into shares, it says, while other financial instruments would also be recruited for convert other debts. Norwegian also indicates plans for a private stock placement with preferential treatment for current shareholders.

Conversion of debts and the new equity would enable the company to access funds from the government guarantee programme and allow it to withstand the current pressure and prepare for a gradual re-opening of its route network.

The measures are “necessary” to secure the government funds and strengthen Norwegian’s balance sheet, says chief executive Jacob Schram.

“We will, over the next weeks, engage in dialogue with the bond holders, lessors and other creditors, with the intent of converting substantial debt to equity,” he says.

“This will create a platform which will enable Norwegian to return to the skies as an even better and stronger company to the benefit of the travelling public, our dedicated colleagues and current shareholders.”