Norwegian Air will sell new shares at a 79% discount to the latest traded price on the Oslo Bourse, the budget carrier said on Tuesday as it seeks to boost its equity in order to qualify for Norway’s government aid package.
Shareholders on Monday approved a plan to convert nearly $1 billion of debt into equity and raise up to 400 million crowns ($39 million) from the sale of new shares to help the airline survive the coronavirus pandemic.
Norwegian aims to sell new shares at 1.0 crown each, it said, far less than Tuesday’s closing price of 4.80 crowns as it seeks to attract investors even while the debt conversion leads to a massive dilution of ownership stakes.
If the process fails however, Norwegian Air is at risk of running out of money by mid-May even though it only pays invoices vital to maintaining minimum operations, it said on April 27.
The debt conversion will hand majority ownership to the airline’s creditors and could leave current shareholders with just 5.2%, and with further dilution for owners who do not take part in the share issue.