Norwegian restructuring approved in Dublin, moves to Norway

Justice Michael Quinn at Ireland’s High Court has confirmed that he will approve the rescue plan for Norwegian (DY, Oslo Gardermoen), allowing the airline to embark on the process of raising new capital and eventually emerge from bankruptcy protection in both Ireland and Norway by the end of May. The written verdict was not yet ready but the judge made it clear in court late on Friday, March 26, about four months after Norwegian asked for Irish bankruptcy protection, that he would rule in favour of the survival plan. The judgement becomes final after a period of appeal of one month has elapsed. “We can now go forward with the reconstruction in Norway and initiate a capital raise,” CEO Jacob Schram said in a statement after the verdict. “This is a demanding and ongoing process, however the result of the court rulings today enforces our beliefs of a positive final outcome. We are looking forward to and are preparing for a post-pandemic world, without travel restrictions and open borders.” Norwegian’s plan, announced last year, scraps its low-cost long-haul business and leaves a fleet of 53 aircraft out of a pre-pandemic tally of 140 to concentrate on Nordic and European routes, while slashing its debt from NOK56 billion kroner (USD6.5 billion) to NOK20 billion (USD2.3 billion). The process in Ireland is a reconstruction involving several of the company’s Irish subsidiaries, the goal of which is “primarily to strengthen the company financially and to rightsize the fleet in order to adapt to future demands,” the statement summarised. The High Court ruling was reached following numerous meetings with the company’s creditors, whereby “a large majority” of them voted in favour of the reconstruction. A similar voting process will now take place with the creditors in the Norwegian reconstruction over the next two weeks before a final ruling in the Norwegian courts around April 9. A key condition of the process is that Norwegian raises at least NOK4.5 billion (USD520 million) from new shares and hybrid capital, of which Norway’s government said in January that it was willing to contribute NOK1.5 billion (USD170 million). Justice Quinn told the court that there was “sufficient confidence” the investment could be secured, and he accepted a proposal that May 26 should be the date Norwegian can step out of bankruptcy protection and continue operations as a normal company. Several creditors have been critical along the way, but, slowly, either agreement was reached or objections were overturned. Finally, Norwegian received support from a large enough number of shareholders and creditors for the court to accept the plan. During the closing hearing on March 25 and 26, there were no creditors left that opposed the rescue plan, with one exception. Ireland’s Environmental Protection Agency voiced objections to the handling of emissions trading quotas, but the judge made it clear that this would not stand in the way of a judgement.