Norwegian Air gained the backing of Norway’s richest man, providing some stability to the struggling discount carrier as it searches for a new suitor following IAG’s decision to abandon its eight-month pursuit.
The shares fell the most on record after Norwegian said it had raised 3 billion kroner (€308m) in a rights issue underwritten by investors including shipping magnate John Fredriksen to avoid breaching financial covenants. While the stock declined, the bonds advanced as investors welcomed the cash infusion, which eases concerns over Norwegian’s viability.
"I’ve known John Fredriksen for a long time, and we even have a CFO who has worked for Fredriksen,” chief executive Bjorn Kjos told reporters in Oslo.
We’re very happy to have the Fredriksen group as a part of that guarantee consortium
Norwegian found cover just days after Aer Lingus and British Airways parent IAG said it had broken off talks on a potential takeover.
Norwegian said it’s no longer in active discussions with suitors, freeing the company to address its balance sheet. But Mr Kjos indicated Norwegian is still open to other potential buyers.
Asked about Lufthansa, which held talks with Norwegian last year, and Ryanair, which has denied speculation of its interest, Mr Kjos declined to discuss specifics. “I can’t say who, I can only say that more than one interested party has contacted us,” he said, while praising IAG as “a very good company”.
The carrier’s bonds recovered losses recorded last week after IAG pulled out. Its €250m of notes due December gained 13 cents on the euro to 96 cents.
IAG’s decision to walk away from the talks had spurred concerns about Norwegian’s finances, with analysts widely predicting that a capital increase was likely —though the rights issue is bigger than many had forecast. About 2.4bn kroner of the total will be guaranteed by DNB Bank, Danske Bank, and Mr Fredriksen, who last year pulled off the painful restructuring of his offshore drilling company Seadrill.
Mr Fredriksen, 74, has said he’s looking at new opportunities as he continues to diversify his wealth, estimated at €6.9bn.
The Norwegian-born Cypriot citizen, made his fortune in shipping in the 1970s and 1980s. At the same time as he ventured into offshore rigs in 2005, he invested in salmon farming, a move that proved especially efficient in balancing his portfolio when the oil industry slumped a decade later.
An investment in Norwegian would be his first in airlines.