Norwegian Air completes emergency equity issue, shares plunge 50%

Norwegian Air completed a deeply discounted share issue on Monday and is expected to finalize 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 2.7 billion crowns, which hinge on a reduction in leverage, in addition to 300 million crowns it has already received.

The airline's shares fell to 2.51 crowns in early trade, down 51% from Friday's close, before partly recovering to trade at 4.38 crowns at 0812 GMT, down 14% on the day. The plan to save the carrier also involves further restructuring, grounding 95% 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 1 Norwegian crown 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 1000 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.

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