Report by : Gan Yung Chyan
/ KUCINTA SETIA
Distributed to All Press & Travel Professionals
The operations of Norwegian Air Shuttle and Norwegian Long Haul known collectively as Norwegian do not seem to be improving. Financing funds will be used to maintain current operations but companies interested in acquiring Norwegian will be concerned about how their profit growth plans can bring benefits.
Norwegian obtained a financing of 3 billion Kronor (about 353 million US dollars) through the sale of shares to avoid violating the terms of the financial contract, thus setting the largest decline in the company's share price. After the British International Aviation Group (IAG) abandoned the eight-month acquisition plan, the airline was open to new acquisitions.
Norwegian is headquartered in Fornebu on the outskirts of Oslo. On Tuesday, the low-cost company said in a statement that the full allotment needs to increase financial flexibility and create space for contractual contracts for issued public bonds. As a result, the stock price fell by 30 per cent.
After British Airways' parent company IAG lost interest in its acquisition, Norwegian invited other companies to bid, resulting in a 20 per cent drop in stock prices last Thursday. Norwegian stated that it will “continue to participate in an integrated discussion that can increase shareholder value” and added that there has been no development in the negotiations.
Norwegian CEO Bjorn Kjos has rejected IAG's two takeover bids and has been working hard to resolve the cash shortage problem, as it has become one of the fastest growing airlines in aviation history, and its capacity has been high. The price causes the income to fall. Norwegian repeatedly stated in its statement that it will pay more attention to profit rather than business development.
At 9.10 am local time on 29 January 2019, at the close of the Oslo Stock Exchange, Norwegian's stock trading price fell by 16 per cent. After the withdrawal of IAG, Norwegian's bonds recovered the losses recorded last week. According to data compiled by Bloomberg, the price of bonds worth 250 million Euros, which expired in December last year, rose 13 cents to 96 cents.
IAG's decision to abandon the bid triggered other companies' concerns about Norwegian's financial situation. Although the size of the allotment is larger than many people predicted, analysts expect that there may be capital increase. DNB Bank, Danske Bank and billionaire shipping giant John Fredriksen invested about 2.4 billion kronor.
According to previous reports, Norwegian must have a book equity value of more than 1.5 billion Kronor and more than 500 million Kronor of liquidity in order to comply with the terms of the contract.
Norwegian stated that its purpose was to reduce the level of expenditure through aircraft sales and delays in the delivery of some aircraft, and had to obtain compensation for some flights from Rolls-Royce due to engine problems.
Norwegian has announced that it will reduce its bases and routes in 2019, reflecting its decline in profitability, which may be the reason for IAG to abandon its acquisition. It had already ceased flight operations to Singapore and reduced its flight frequencies to Spain in order to curtail operation losses. It maintains its subsidiaries in the UK and Argentina known respectively as Norwegian Air UK and Norwegian Air Argentina.
Lufthansa also said that it had considered the acquisition of Norwegian. The profit warning of Ryanair, Europe's largest airline, and the uncertainty of the impact of Brexit flights and market developments (because the UK is the main market for Norwegian) will allow bidders to consider acquisitions more carefully.
Existing shareholders, including Kjos and Chairman Bjorn Halvor Kise, will participate in the allotment. Fredriksen worked hard last year to complete the difficult restructuring of his offshore drilling company Seadrill Ltd. He said he is looking for new opportunities as his wealth continues to diversify. It is estimated that his wealth is 7.9 billion US Dollars.
/ KUCINTA SETIA
Distributed to All Press & Travel Professionals
The operations of Norwegian Air Shuttle and Norwegian Long Haul known collectively as Norwegian do not seem to be improving. Financing funds will be used to maintain current operations but companies interested in acquiring Norwegian will be concerned about how their profit growth plans can bring benefits.
Norwegian obtained a financing of 3 billion Kronor (about 353 million US dollars) through the sale of shares to avoid violating the terms of the financial contract, thus setting the largest decline in the company's share price. After the British International Aviation Group (IAG) abandoned the eight-month acquisition plan, the airline was open to new acquisitions.
Norwegian is headquartered in Fornebu on the outskirts of Oslo. On Tuesday, the low-cost company said in a statement that the full allotment needs to increase financial flexibility and create space for contractual contracts for issued public bonds. As a result, the stock price fell by 30 per cent.
After British Airways' parent company IAG lost interest in its acquisition, Norwegian invited other companies to bid, resulting in a 20 per cent drop in stock prices last Thursday. Norwegian stated that it will “continue to participate in an integrated discussion that can increase shareholder value” and added that there has been no development in the negotiations.
Norwegian CEO Bjorn Kjos has rejected IAG's two takeover bids and has been working hard to resolve the cash shortage problem, as it has become one of the fastest growing airlines in aviation history, and its capacity has been high. The price causes the income to fall. Norwegian repeatedly stated in its statement that it will pay more attention to profit rather than business development.
At 9.10 am local time on 29 January 2019, at the close of the Oslo Stock Exchange, Norwegian's stock trading price fell by 16 per cent. After the withdrawal of IAG, Norwegian's bonds recovered the losses recorded last week. According to data compiled by Bloomberg, the price of bonds worth 250 million Euros, which expired in December last year, rose 13 cents to 96 cents.
IAG's decision to abandon the bid triggered other companies' concerns about Norwegian's financial situation. Although the size of the allotment is larger than many people predicted, analysts expect that there may be capital increase. DNB Bank, Danske Bank and billionaire shipping giant John Fredriksen invested about 2.4 billion kronor.
According to previous reports, Norwegian must have a book equity value of more than 1.5 billion Kronor and more than 500 million Kronor of liquidity in order to comply with the terms of the contract.
Norwegian stated that its purpose was to reduce the level of expenditure through aircraft sales and delays in the delivery of some aircraft, and had to obtain compensation for some flights from Rolls-Royce due to engine problems.
Norwegian has announced that it will reduce its bases and routes in 2019, reflecting its decline in profitability, which may be the reason for IAG to abandon its acquisition. It had already ceased flight operations to Singapore and reduced its flight frequencies to Spain in order to curtail operation losses. It maintains its subsidiaries in the UK and Argentina known respectively as Norwegian Air UK and Norwegian Air Argentina.
Lufthansa also said that it had considered the acquisition of Norwegian. The profit warning of Ryanair, Europe's largest airline, and the uncertainty of the impact of Brexit flights and market developments (because the UK is the main market for Norwegian) will allow bidders to consider acquisitions more carefully.
Existing shareholders, including Kjos and Chairman Bjorn Halvor Kise, will participate in the allotment. Fredriksen worked hard last year to complete the difficult restructuring of his offshore drilling company Seadrill Ltd. He said he is looking for new opportunities as his wealth continues to diversify. It is estimated that his wealth is 7.9 billion US Dollars.
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