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- Update from DP Aircraft 1 following conditional equity swap agreement with Norwegian Air Shuttle
DP Aircraft I (DPA) has provided an update, covering its two lessees, Thai Airways and Norwegian Air Shuttle, and its lending banks. DPA re-affirmed that the decision to suspend dividend payments remains unchanged, noting that this position is unlikely to be reviewed until there is greater clarity as to both the ongoing financial position of its two lessees and the broader macroeconomic backdrop; and will need to be agreed in consultation with the company’s lending banks.
“As adverted in the annual Report for the year ended 31 December 2019, which was published at the end of last month, the company has agreed a rent deferral arrangement with Thai, commencing on 29 April 2020. Pursuant to this arrangement, lease rental payments representing approximately US$3.4m in aggregate are being deferred, with the deferred amounts to be paid back in twelve equal monthly instalments, along with interest accruing thereon, by November 2021. This is subject to signing of final documentation. The company’s debt repayment obligations in respect of the assets leased to Thai remain unchanged; and the company’s lending banks in relation thereto have given their approval to this deferral arrangement.
Thai Airways made its first lease repayment for the adjusted amount in respect of April on its due date.”
“As has been widely reported, Norwegian Air Shuttle has been offered financial support by the Norwegian government in an amount worth up to NOK3bn (approximately £230m) subject to certain pre-conditions, among them agreement from Norwegian’s bondholders and lessors to swap their debt and lease payment rights for equity in Norwegian. The board and its advisers have been in negotiations with Norwegian regarding this proposal, and have agreed to the equity swap on the following basis:
Norwegian is now in the process of finalising approval from its shareholders, bondholders and lessors for implementation of the proposed debt for equity swap. Norwegian received formal approval from three of its four bondholder groups for the proposal at a bondholder meeting held on 1 May, and has subsequently reached agreement with the other group; a further and final bondholder meeting is now expected to be held on 18 May. Norwegian has also confirmed that it has received sufficient support from lessors for the swap to satisfy the condition relating thereto in its proposal to bondholders. An extraordinary general meeting of Norwegian’s shareholders on 4 May overwhelmingly supported the debt to equity proposition, with over 95 per cent. of votes cast in favour of the proposal. The arrangements agreed between the Company and Norwegian as described above will not come into effect until final bondholder approval has been given on 18 May.
The company’s lending banks in respect of the assets leased to Norwegian have given their approval to the arrangements described above subject to documentation being finalised, and at the same time have agreed to certain adjustments to the Company’s repayment obligations in relation thereto. Repayments of principal due during the period from May 2020 to March 2021 will be deferred, and the profile of debt service for the period starting from 1 April 2021 will be adjusted to reflect the proposed reduction in Norwegian’s monthly lease payments. All deferred amounts must be repaid by 30 June 2025 at the latest (with prepayment permissible without charge); and interest on deferred amounts will be payable on a floating rate base calculated as 1-Month Libor plus cost of funds plus increased margin.”.
DPA: Update from DP Aircraft 1 following conditional equity swap agreement with Norwegian Air Shuttle
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Good to see parties agreed with the swap on Norwegian Air Shuttle. This airline has the ingredients to survive.
Regards, Sam from https://airportinfo.com