Norwegian Proposes Debt Restructuring That Will Wipe Out Owners

Norwegian Air Shuttle ASA, the low-cost carrier fighting for survival, presented a plan to restructure part of its heavy debt load that will largely wipe out existing shareholders.

Norwegian is asking the holders of three bonds to convert at least 60% into equity. Aircraft lessors would exchange at least $500 million of the 33.3 billion kroner ($3.1 billion) they are owed for equity instead.

The proposal would leave existing owners of the stock with 5.2% of the company. That’s before a 400 million-krone equity issue that would dilute them further.

The airline is racing against the clock to meet strict terms imposed by the Norwegian government to give it access to the bulk of a 3 billion-krone package in loan guarantees. Bondholder meetings are scheduled April 30, before a shareholders’ meeting on May 4.

Norwegian’s stock dropped as much as 9.5% in early Oslo trading.