The carrier announces a €309 million rights issue and says it is now open to bids from other companies.
Norwegian’s share price tumbled further, by “the most ever” according to Bloomberg, after raising NOK 3 billion (€309 million) in a share sale to avoid crossing financial covenants.
The company now says it is open to fresh takeover proposals, a few days after British Airways owner IAG abandoned its attempts to woo it over a period of eight months.
The fully underwritten rights issue is designed to make room for the demands of covenants on outstanding bonds, Norwegian explained. The news sent stocks down 30%, Bloomberg reports.
Norwegian will “continue to be willing to engage in consolidation discussions that can develop shareholder value,” though it added that there are no further talks at the moment.
Shares were selling 16% lower when trading opened this morning in Oslo, while its bonds recovered losses recorded last week after IAG pulled out.
“Norwegian has been through a period of significant growth. Focus going forward will increasingly be on cost savings and CAPEX reductions,” comments Norwegian CEO Bjørn Kjos.
“We will now get in place a strengthened balance sheet that supports the further development of the company. With the strengthened balance sheet, the organization can now devote all its attention to further development of the company.”
Norwegian will publish its accounts for the fourth quarter of 2018 on February 7, but already it is forecasting a loss of NOK 2.5 billion before tax, which indicates that it has not succeeded in creating better earnings in 2018.
“A capital increase was the last resort when looking at the accounting figures. There is a need for a thorough transformation of Norwegian,” Sydbank equity analyst Jacob Pedersen tells Check-In.dk.
He believes Norwegian should have taken the situation more seriously earlier, and that it is only now that the company feels it is seriously under pressure to come up with comprehensive solutions.
“For several quarters I have wondered why management was not dealing with its challenges more urgently than it actually seemed,” Pedersen says.