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– They have the knife to their throats. If rejected by management’s proposal at the general meeting, there aren’t many alternatives left, associate professor Espen Andersen of BI Norwegian Business School tells NTB.
CEO Jacob Schram wants his creditors to convert a large part of Norway’s debt into equity to avoid bankruptcy.
– If Norwegian converts debt into equity on the scale they are talking about, the company has a much better chance of succeeding. I think the Nordic market needs Norwegian to control SAS and I hope they get it, says Andersen.
If Schram receives shareholder support at Monday’s extraordinary general meeting, his goal is to gain access to the $ 2.7 billion state bailout package by mid-May. With access to crisis loans, Schram believes it is possible to keep the company afloat year-round.
Looking at three options
The administration spent last week gathering support for the bailout plan from bondholders and the 24 leasing companies that rent flights to Norwegian.
Andersen devises three options for the way forward if shareholders must say no to management’s bailout plan. The first, that the state must come to rescue Norwegian, has little faith in him.
– Another possibility is that some other large investors invest in capital. But I don’t know who it should be, says Andersen.
– The third possibility is that Norweigan ends up in the district court, but reappears as smaller companies. These are good people and a basically well-run company, he says.
– I have to think
Andersen recalls that Norwegian is in a situation where creditors will in practice take over the companies.
– I think it is important that small shareholders are aware, he says, remembering the following points:
– When you buy a share in a company, you buy the right to what is left when everyone else has received your payment.
The reality is that there is no money left in the company, and Andersen emphasizes that Norwegian shareholders are no longer negotiating with the owners, but with the creditors. These include several leasing companies, which risk having a large stake in Norwegian.
“The last resort”
BI researcher Andersen believes the protesting small shareholders are betting that the state should come with a rescue plaque.
– But I very much doubt that the state will come and save Norwegian, he says.
Flight analyst Hans Jørgen Elnæs also believes that it is too far within the state to enter direct capital or property.
– This is the last resort, he tells NTB.
If Norwegian files for bankruptcy, Norway may re-enter a situation in which SAS obtains an approximate monopoly position in the Norwegian market. The same was true when SAS bought its competitor Braathens in 2004.
The entire airline industry is seriously affected by travel restrictions that have been introduced both in Norway and internationally to prevent the spread of the coronavirus. Norwegian was already in a difficult situation with high debt before the crown crisis.
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