Nordic Aviation Capital has applied to the High Court in Dublin to launch a scheme of arrangement to defer debt repayments for 12 months while simultaneously receiving a $60 million equity injection from its existing shareholders.
NAC has applied for a scheme of arrangement under the Irish Companies Act which if approved would be an agreement between NAC and its lenders to standstill and defer the payments of interest and principal on its borrowings, covering the next 6-12 months. It is a mechanism available under Irish law that allows solvent companies to implement arrangements with lenders. It requires court approval and the agreement of lenders voting in classes representing 75% by value and more than 50% by number.
NAC entered the current global crisis in a strong liquidity position, having recently posted its strongest first-half financial performance to date. It has delivered 23 years of consistent profitability and growth. It owned 500 aircraft as of January 1, 2020 and had shareholders’ equity of $1.8bn at June 30, 2019.
As a result of the COVID-19 outbreak and the consequent unprecedented depression of demand for air travel, the Company, in common with its peers, has encountered a large number of lessees deferring lease payments. As a result of this, the Company has been liaising with lenders concerning the standstill and deferral of its debt obligations.
The long-term equity shareholders in NAC, EQT Partners, KIRKBI Invest, GIC (the sovereign wealth fund of Singapore) and Martin Moller, its founder and Chairman, have committed $60m of new equity as a signal of their confidence in the prospects for the business and their support for its strategy.
Søren M. Overgaard, chief executive of Nordic Aviation Capital, said, “The COVID-19 pandemic has resulted in considerable changes in all our lives and for businesses across the world, in every sector, but particularly for the travel industry. No aircraft lessor is immune.
“The anticipation of a prolonged recovery from COVID-19 drove the requirement to undertake this complex engagement process with our lenders. We remain committed to emerging stronger and more robust in the aftermath of the pandemic. While the extent and the full impact of COVID-19 is as yet unknown, we remain confident that the regional sector will recover first and of our ability to navigate through this challenging period.”
The scheme documents will be issued to NAC lenders in due course in accordance with Irish Law.