UPDATE 1-Norwegian Air shares fall as CEO, chairman sell subscription rights

Shares in Norwegian Air fell on Monday after its chief executive and board chairman agreed to sell some of their subscription rights to a share issue at a discount, in a deal that will help the loss-making carrier raise cash. The sale of the subscription rights, which had been expected, will dilute the 24.66 percent stake held in Norwegian by Chief Executive Bjoern Kjos, Chairman Bjoern Kise and their families, via their HBK Holding vehicle, although it was not clear by how much.

Norwegian Air on Jan. 29 announced plans to raise 3 billion Norwegian crowns ($348 million) in a share sale, just days after British Airways owner IAG ruled out a bid for the budget airline. Shares in Norwegian Air dropped as much as 7 percent at the opening of the Oslo bourse before halving their losses by 0843 GMT, among the worst performers of the Oslo benchmark index .

The European airline sector is under pressure with several high-profile company collapses, the latest of which took place on Sunday when British budget airline Flybmi filed for bankruptcy. Norwegian Air is trying to replicate the low-cost model on transatlantic flights but is struggling to make the business profitable.

"HBK has agreed to sell the subscription rights at a price of 70 percent of the theoretical value of the subscription rights at the time of pricing of the rights issue, expected on or about Feb. 18," HBK said in a statement. The buyer or buyers of the rights, who were not named, have committed to a total investment of 500 million crowns, including the purchase of subscription rights and subscription in the rights issue, it added.

"The number of subscription rights to be sold (by HBK) will be determined based on the subscription price and number of new shares to be issued in the rights issue," HBK said. Norwegian Air said last month billionaire investor John Fredriksen was among those who agreed to take part in its share issue. ($1 = 8.6273 Norwegian crowns) (Additional reporting by Gwladys Fouche Editing by David Holmes and Kirsten Donovan)

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