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. <br />
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Background<br />
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. <br />
<br />
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).<br />
<br />
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. <br />
<br />
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. <br />
<br />
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. <br />
<br />
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. <br />
<br />
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.<br />
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. <br />
<br />
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.<br />
<br />
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.<br />
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.<br />
<br />
For more information, please contact Geir Karlsen, CFO, phone +47 916 08 332<br
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Fornebu, Norway - 3 December 2020<br />
Norwegian Air Shuttle ASA<br />
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Attached, notice of Extraordinary General Meeting