Norse Atlantic Airways is hoping to raise US$45 million (NOK 501 million) in a new privately placed offering of new shares for a fixed price of NOK 11.00 per share.
Norse confirmed that it has received pre-commitments covering the entire offer size and noted that it may propose a subsequent offering for existing shareholders not participating in the private placement.
Pareto Securities and SpareBank 1 Markets are joint global coordinators and joint bookrunners in the private placement. Wikborg Rein Advokatfirma acts as Norse’s legal counsel, and Advokatfirmaet Wiersholm acts as legal counsel to the joint bookrunners.
Norse intends to use the net proceeds to improve its liquidity “through the shoulder and winter season, until such time as the revenue generated from the seasonally stronger summer program bookings are collected, as well as for general corporate purposes”.
The airline stated that the fixed offer price was determined by the Board in discussions with the managers following a pre-sounding of the private placement with “selected wall-crossed existing and new investors”.
Scorpio Holdings, Norse’s largest shareholder with approx. 20.5% of the shares outstanding) and B T Larsen, the second largest shareholder with approx. 19.9% outstanding shares) have pre-committed to subscribe for NOK 150 million each in the private placement.
Norse adds that BT Larsen’s allocation may be scaled back In the case of applications from other existing shareholders and/or strong demand in general.
Scorpio is expected to assume one seat on the board of directors, and an additional independent board seat is expected to be added comprising a total of five directors.
Six-month lock-ups have been agreed for the Company's management and the Board, as well as B T Larsen and Scorpio.
The private placement will be divided in two tranches: one tranche of 9,978,161 offer shares with a settlement date. Of November 8, and a second tranche with a number of offer shares that corresponds to a total transaction offer size, to be settled on November 28.
Norse said that it has structured the issuance via a private placement to efficiently raise the necessary capital to improve its liquidity through the shoulder and winter season, and for revenues to be collected. The investor pre-sounding process with existing and new investors, Norse says, has enabled the company to “obtain the best possible terms” and offer price, with the added benefit of receiving pre-commitments from the pre-committing investors to reduce transaction risk.
In order to limit the dilutive effect of the private placement and to facilitate equal treatment, Norse added that it would consider a subsequent offering directed towards shareholders who were not participating.
Norse announced on October 31 with its third quarter results that it was planning to appoint advisers “to explore and advise on strategic alternatives for the Company”. The airline revealed that it had recently been approached by and engaged in discussions with “several industrial players, seeking to explore industrial opportunities”, adding that from such discussions, Norse’s “business, market position, and assets are perceived as attractive, and that the Company may be well positioned to capitalize on this through industrial or strategic actions”.
For the third quarter of 2023, Norse reported revenue of $204.8 million and $344.7 million in the nine months to end September, which compares favourably with the full year 2022 figure of $104.3 million. Operating profit rose into the black in the third quarter with $10.3 million – a rise from a loss of $26.2 million in the second quarter. Net profit also turned positive with $1.6 million. Norse has also more than doubled its number of passengers, ASK and RPK in the third quarter compared to the previous quarter. However, the airline faced some headwinds from increased fuel prices, and a weaker than expected cargo market.
During the quarter, Norse states that “an adverse working capital movement led to a reduction of available liquidity compared to the previous quarter”. Norse said that it was “in the process of concluding a negotiation with a key supplier, that will require a payment plan to be accelerated”, which created the need for the company to raise funds via the aforementioned private placement.