On 15 December 2020, AerCap Holdings N.V. (“AerCap”) has, through its wholly owned subsidiary Ballyfin Aviation Limited, sold 41,605,161 shares in Norwegian Air Shuttle ASA (“NAS”). Following this transaction, AerCap has, through certain of its indirect wholly owned subsidiaries, as well as certain other companies in which AerCap has an interest, an interest in a total of 177,893,106 ordinary shares, representing approximately 4.5% of the share capital and voting rights in NAS

The Board of Directors of Norwegian Air Shuttle ASA (“Norwegian” or the “Company”) is today proposing a plan and set of actions that secures current and future travelers and ultimately will potentially enable the company to exit its current Irish Examinership process through implementations that aim to right-size the company operations at a level of proven profitability. This will mainly be done by reducing the fleet of aircraft, and therethrough reconstruct a balance sheet that is focused and strong enough to attract new investors and stakeholders including potentially Norwegian government support.

The debt to equity conversion will not only include parts or whole of aircraft financing or leasing liabilities, vendor/supplier liabilities, bond obligations but potentially also include arrangements that requires Norwegian only to pay for aircraft when in use until 2022 (so called «PBH» Power by the hour). An equity issue up to NOK 4 billion in the form of common stock and/or hybrid equity instruments to current, new shareholders and other potential stakeholders is viewed as the final step in this process. It is the intention that should all these actions be successful, current shareholders will together with the current debtors become meaningful minority shareholders of the company. An extraordinary general meeting will be held 17 December 2020.

Background

On 21 March 2020, in response to the Covid-19 outbreak and its negative economic effects on businesses, the Norwegian government approved certain measures and state aid including, inter alia, a state guarantee scheme pursuant to which the government would guarantee 90% of loans granted to the company by banks and other financial institutions, amounting to NOK 3 billion of state aid. On 20 May 2020, the company announced that following its conversion of approximately NOK 12.7 billion of debt to equity, it had satisfied the conditions precedent for obtaining the full amount of support available pursuant to the said state guarantee scheme, and had in addition completed a private placement in the amount of NOK 400 million (for more information, see the company’s prospectus dated 5 May 2020, and the company’s stock exchange notice dated 20 May 2020). Following a limited improvement in conditions in April and May, global coronavirus cases and deaths have been climbing since early June, resulting in re-imposition of measures aimed at curtailing the spread of the disease, including travel and other restrictions that have proven particularly challenging for the company and the airline industry at large.

The company has been strongly affected by the pandemic and has reported a net loss of NOK 6,412 million in the second and third quarter 2020. In addition, the Company has experienced a 91% passenger decline compared to the same period last year and has taken the decision to furlough additional employees and reduce capacity considerably, leaving only six to seven aircraft in operation. The company’s successful restructuring in the first six months of 2020 improved equity by NOK 18.2 billion, achieved by converting bond debt, lease liabilities and accounts payable to equity, as well as a public offering.

However, despite this strong support from stakeholders and unprecedented voluntary strengthening of the balance sheet, it became evident that the company needed further support from the government due to the continued impact of the pandemic. Although the company presented a plan for its successful emergence from the pandemic, the Norwegian Government announced on 9 November 2020 that it would not provide additional financial support for the time being. As a consequence, the board of directors of the company resolved on 17 November 2020 to downsize its aircraft platform through a court-supervised process in Ireland termed “examinership”.

An examiner was appointed for this purpose on 18 November 2020 and the current target date for completion of this process is 26 February 2021. The company believes that Irish examinership represents a fair and transparent way forward and will enable current operations to continue whilst resizing the balance sheet and operational expenses in a manner sufficient to attract further capital. The process imposes a global “automatic stay” on creditors. This means that, for the duration of the process, creditors of the companies in examinership are generally unable to take action to secure payment, and the relevant companies cannot pay or otherwise discharge liabilities incurred prior to the commencement of the examinership process. To safeguard customers and stakeholders the company will determine whether enhanced measures will be required, including a possible Norwegian reconstruction process based on the temporary reconstruction act entered into force on 11 May 2020.

The company asks for the continued support of its shareholders to prepare for future capital increases in parallel with the restructuring of its balance sheet through the above legal proceedings. By way of the above recapitalization process, the company aims to attract up to NOK 4 billion in cash in addition to significant equitization of existing debt at market price. The terms of such capital will be announced subsequently and will likely consist of a variety of capital classes such as equity, subordinated debt, loans and, if possible, further state aid.