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Norwegian Air completed a deeply discounted share issue on Monday and is expected to finalize a conversion of bonds to equity later in the day, allowing a downsized version of the budget carrier to survive the novel coronavirus outbreak.

Existing shareholders will see their stakes massively diluted by the financial rescue, which will increase the number of shares in the company to about 3.5 billion from just 163.6 million.

The debt conversion and share sale will allow Norwegian Air to tap government guarantees of up to $265 million, which hinge on a reduction in leverage, in addition to $30 million it has already received.

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The airline’s shares fell to $0.25 in early trade, down 51 percent from Friday’s close, before partly recovering to trade at $0.43 at 08.12 GMT, down 14 percent on the day.

The plan to save the carrier also involves further restructuring, grounding 95 percent of the fleet for up to 12 months and leaving just seven aircraft in operation before a slow build-up can start in 2021, it said last month.

The deeply discounted sale of 400 million new shares, at just $0.1 each, was about seven times oversubscribed, and the new stock can be traded from later this week, the budget carrier said on Monday.

A meeting of bondholders is due to start at 10.00 GMT.

A pioneer in low-fare transatlantic air travel, Norwegian Air’s rapid expansion left it with some $8 billion of debt at the end of 2019, making it particularly vulnerable to the fallout from the novel coronavirus that causes the COVID-19 respiratory disease

(Reporting by Terje Solsvik, editing by Gwladys Fouche, Kirsten Donovan)

This article was from Reuters and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: Norwegian Air's rapid expansion left it with some $8 billion of debt at the end of 2019. John Cameron / Unsplash