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Negotiations have been going on for several days. Now CEO Jacob Schram asks company shareholders to say yes to management’s bailout plan at an extraordinary general meeting on Monday, otherwise bankruptcy threatens.
– They have the knife against their throats. If there is no vote on management’s proposal at the AGM, there aren’t many alternatives left, says Espen Andersen of BI Norwegian Business School.
If the rescue plan is accepted, Schram intends to receive part of the 2.7 billion NOK national rescue package in mid-May. With access to crisis loans, Schram believes it is possible to keep the company afloat during 2020.
Norwegian lace has Over the past week, he negotiated with lenders and the 24 companies that rent planes to the group to get enough support for the plan.
Lenders are in bonds issued by Norwegian for the equivalent of $ 1.2 billion. Norwegian first offered lenders 41.7 percent of the shares as compensation for these loans.
As of Thursday, lenders have reportedly taken a position on the proposal. But the negotiations dragged on in time and Norwegian made a new and more generous offer.
What Jacob Schram called “the last offer” was that half of the debt and 80 percent of a so-called $ 150 million convertible bond loan should be repaid with the shares. In addition, the proceeds from the sale of the most lucrative outings at Gatwick in London were pledged as collateral.
Friday declared Norwegian they received “robust” support from three of the four groups of lenders. But the proposal received 62 percent support from the last group of bondholders, which is not enough because a two-thirds majority is required.
That is why the negotiations continued over the weekend.
The entire aviation and travel industry is severely affected by restrictions imposed to curb the spread of the corona virus, but Norwegian was already in a very difficult financial situation.
If shareholders say no, Andersen sees three possibilities: for other major players to invest, for it to go bankrupt, or for the Norwegian state to save the Norwegian, which he believes is highly unlikely.
Neither the flight analyst Hans Jørgen Elnæs believes that the state will intervene. Now it depends on the extraordinary general meeting, he says.
– This is the last resort.
The four Norwegians’ personnel companies in Sweden and Denmark, with a total of 4,700 pilots and cabin workers, filed for bankruptcy just over a week ago.
In the event of the bankruptcy of the entire group, Norway may end up in a situation where SAS receives something similar to a monopoly situation in the Norwegian market, such as when SAS bought its competitor Braathens in 2004.
– I think the Nordic market needs Norwegian to keep SAS in check and I hope they get it, says Espen Andersen.
