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At the opening of the stock exchange on Thursday, Norwegian’s share price was NOK 58 per share, up from yesterday’s closing price of NOK 0.64. However, everything has a logical explanation.
On Thursday, Norwegian held an extraordinary general meeting to vote on a series of proposals to refinance the company. The board and management received a solid majority for all parts of the plan and can continue to work to save the group from bankruptcy.
Among the points that were adopted was the so-called splicing of shares: that the company reduces the number of shares in a certain proportion. In Norwegian’s case, this occurs in such a way that every 100 shares becomes one share, at the same time that the price level changes accordingly. This already takes place today, Friday, December 18.
In the last month, the price has risen between 32 øre minimum per share and approximately one crown per share maximum. After a splice, this corresponds to between NOK 32 and 100 per share.
Trading in the Norwegian stock was halted from the beginning on Friday, but started again just 10 minutes after the stock market opened. The price is fluctuating sharply and was close to NOK 60, but is now below NOK 50. If you factor in the stock splicing, this corresponds to a decrease of around 22 percent from yesterday’s closing price.
You can become more rational in stock trading.
Norwegian’s stock price has made some strange changes this fall and winter. Despite the fact that the company is on the verge of bankruptcy, there have been several days in which the price has risen sharply.
When Norwegian presented the details of its next rescue plan, it was also clear that current shareholders, along with current lenders, will be a significant minority shareholder in the company. The market does not seem to have taken this into account.
So Nordea’s chief investment officer Robert Næss thinks it makes sense for the share price to fall today.
– If you think about it rationally, they will bring in up to four billion, and those who enter with money will make tough demands and have no particular interest in the former shareholders taking something special.
– Do you think there are plans for a more rational trading of the stock, now that the share price is higher than before this splice?
– I think it may be a good point. I have tried to follow Facebook groups with new shareholders. Many people think it is exciting to get into Norwegian, because the share price is so low. Now it’s around 50 crowns, and then some of that irrationality may go away, he says.
Uncertainty about the issue price
At the call for the general meeting, Norwegian announced that new shares priced in the range of five to 40 crowns each would be printed, that is, well below current price levels, in a rights issue.
Later, the board changed the range from 5 to 200 kronor per share, but did not say anything about the reasons for the large range or how the price should be set.
It is also unclear how much fresh money will be raised, “up to” four billion crowns.
Karlsen said during the general meeting that a rights issue may take place in late February 2021, or perhaps a little later.
– When will shareholders know more about the size and prices of the issue?
– There will be a balance in terms of what company we are after bankruptcy protection. Although we have a plan, we won’t know until sometime in January and February which parts of the business are involved. We are already testing the interest of investors, and when we have a clearer picture of it, we can determine how much capital we are going to raise and at what price, Karlsen said.
The board and management have recently frequently discussed the future of long-haul operations between Europe and other continents. DN wrote this week that several people on the board want to shut down the business, which has caused major losses and additional costs for Norwegian since the launch in 2013.
Silence about numbers in long distance
On Thursday, Schram had this to say about the fate of long distance:
– This is an area that was changing even before entering this process, and in which we are working to make it more profitable. The strategy of moving from growth to profitability was laid out in 2018, and we saw that we were on a very good path forward in the long distance for the crown to occur.
– Has long distance ever had a positive contribution to results before the crown?
– We don’t comment on individual parts of the business in that way.
– When will you make a decision about long distance?
– We have started with that, and it is part of the solution of how the company should take care of bankruptcy protection. Then we’ll look at short and long distances and what’s next, says Schram.
Thursday’s meeting was opened by the chairman of the board, Niels Smedegaard, who recently kept open that long distance could be included.
During the meeting, the council president requested broad powers.
– Most importantly, Norwegian will emerge from the crisis created by the crown and will emerge from it as an investment company, Smedegaard said.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases via a link, which leads directly to our pages. Copying or other use of all or part of the content may only be done with written permission or as permitted by law. For more terms, see here.
