Norwegian Air Shuttle ASA strengthens its balance sheet through a fully underwritten rights issue of NOK 3 billion

NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL.

Oslo, 29 January 2019

Norwegian Air Shuttle ASA (“Norwegian” or the “Company”) is strengthening its balance sheet through a fully underwritten rights issue of NOK 3 billion in order to increase its financial flexibility and create headroom to the covenants of its outstanding bonds compared with the Company’s business plan.

The Company is changing its strategic focus from growth to profitability. The Company intends to capitalize on the market position and scale built up over the last years. As a consequence of the changed focus, the capital expenditures will be reduced, which is expected to be achieved by a combination of (i) aircraft divestment, including JV, and (ii) postponement of aircraft deliveries. Further, the Company is working on several operational improvements, including (i) the extensive cost reduction program, #Focus2019, which will contribute to estimated reduction of minimum NOK 2 billion in 2019, (ii) optimization of the base structure and the route network and (iii) the agreement with Rolls-Royce related to compensation for the operational disruptions on its long-haul operations which was entered into in December 2018. The Company will update the market further on these initiatives on its Q4 2018 presentation. The fully underwritten rights issue in combination with these improvement initiatives will significantly improve the financial position of the Company during 2019.

“Norwegian has been through a period with significant growth. Focus going forward will increasingly be on cost savings and CAPEX reductions. We will now get in place a strengthened balance sheet that supports the further development of the company. With the strengthened balance sheet, the organization can now devote all its attention to further development of the company,” says CEO Bjørn Kjos.

According to its preliminary 2018 figures, the Company delivered revenues of approximately NOK 40.3 billion, EBITDA of approximately NOK -2.2 billion, EBITDA excl other losses/gains of NOK –1.2 billion, EBIT of approximately NOK -3.8 billion and EBT of approximately NOK -2.5 billion in 2018. At the end of Q4 2018, the Company had cash and cash equivalents of NOK 1.9 billion and equity position of NOK 1.7 billion. Due to the rights issue, the Company will publish its Q4 2018 results on 7 February 2019 as set out below.

On 12 April 2018, it was announced that International Airlines Group (“IAG”) had acquired 4.61 per cent of the shares in the Company, and that IAG was considering to make an offer for all the shares in the Company. Subsequently, the Company received enquiries from several parties who expressed interest for structural transactions, financing of the Company and various forms of operational and financial cooperation. Discussions with such parties have been ongoing on several levels and with different approaches. The Company has previously announced that it received two preliminary and non-binding conditional proposals from IAG to acquire all the shares in the Company, which were rejected by the Company on the basis that they undervalued the Company and its prospects.

Following, among other issues, severe delays in aircraft and engine deliveries, the Company has for some time been assessing financing needs and financing alternatives, including raising equity. The Company secured stand-by underwriting commitment for a rights issue of up to NOK 3 billion in Q4 2018. However, during Q4 2018 and through December 2018, it has not been in position to raise equity while being engaged in new, concrete and specific negotiations related to the acquisition of the shares of the Company. No such discussions are currently ongoing.

On 24 January 2019, IAG announced that it does not intend to make an offer for the Company and that, in due course, it will be selling its shareholding in the Company.

The Company believes that a strengthened balance sheet will increase its competitiveness and stand-alone financial strength. The Board will nevertheless continue to be willing to engage in consolidation discussions that can develop shareholder value in Norwegian.

The proposed issuance of new shares will generate gross proceeds of approximately NOK 3 billion and will be conducted as a fully underwritten rights issue, in order to ensure equal treatment of Norwegian's more than 16,000 shareholders. The rights issue is, subject to certain conditions, fully underwritten. Norwegian' largest shareholders, Bjørn Kjos, Chief Executive Officer in the Company, and Bjørn Halvor Kise, Chairman of the Board of the Company, have pre-committed to subscribe for NOK 343 million in aggregate through HBK Holding AS (NOK 300 million) and Sneisungen AS (NOK 43 million). Certain other larger shareholders have pre-committed and underwritten NOK 267 million. Since only a few shareholders have been invited to underwrite prior to this announcement, other professional shareholders will be allowed to participate in the underwriting until 5 February 2019. Additional shareholders have indicated their support for the rights issue. The remaining NOK 2,390 million of the rights issue is underwritten by DNB Markets, a part of DNB Bank ASA (“DNB Markets”), Sterna Finance Ltd., a company indirectly controlled by trusts established by Mr. John Fredriksen for the benefit of his immediate family, and Danske Bank, Norwegian Branch (“Danske Bank”). DNB Markets has been retained as Sole Global Coordinator and Joint Bookrunner for the rights issue. Arctic Securities and Danske Bank are acting as Joint Bookrunners for the rights issue.

The Company will call for an extraordinary general meeting ("EGM") to be held on or about 19 February 2019 to resolve the rights issue. Shareholders now representing 33 per cent of the shares have undertaken to vote in favor of the rights issue at the EGM and additional shareholders have indicated that they will support the rights issue at the EGM. Terms of the rights issue, including the subscription price and the number of shares to be issued, will be proposed by the Board of Directors and are expected to be announced on or about 18 February 2019.

According to the current timetable, and subject to approval by the EGM, the subscription period for the rights issue is expected to commence on or about 22 February 2019 and end on or about 8 March 2019. Norwegian’s shares are expected to be traded exclusive of subscription rights from on or about 20 February 2019. Freely tradable subscription rights will be applied for listing on the Oslo Stock Exchange and will be tradable from the commencement of the subscription period and until on or about 6 March 2019, two days prior to the expiry of the subscription period.

The Company will prepare and publish a prospectus for the rights issue, which will be subject to approval by the Norwegian Financial Supervisory Authority prior to publication.

All dates and other figures with respect to the rights issue included herein remain tentative and subject to change. Any changes will be announced at the extraordinary general meeting or through stock exchange announcements.

The Company has received a proposal from certain large shareholders that representation from the shareholders of the Company should be increased in the election committee at the next annual general meeting, and that Article 8 of the Articles of Association of the Company should be changed so that the chair of the Board of Directors of the Company is no longer a permanent member of the committee. HBK Holding AS, the largest shareholder of the Company, supports the proposal.

Changes to the Company’s financial calendar

In connection with the fully underwritten rights issue, the Company will publish its Q4 2018 results on 7 February 2019. The traffic update for February 2019 will be published on 11 March 2019.

Analyst and investor call

The Company will host an analyst and investor call at 10:00 CET today, 29 January 2019. Please see dial-in information below in order to participate:

Norway: +47 80010392 / +47 21563162 International: +44 (0) 203 0095710

Conference ID: 3034018

For more information, please contact:

Geir Karlsen, Chief Financial Officer, phone: +47 916 08 332 

Stine Klund, Investor Relations Officer, phone: +47 986 99 259

This announcement is not an offer for sale of securities in the United States or any other country. The securities referred to herein have not been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be sold in the United States absent registration or pursuant to an exemption from registration under the U.S. Securities Act. The Company does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Any offering of securities will be made by means of a prospectus that may be obtained from the Company when the subscription period commences and that will contain detailed information about the Company and management, as well as financial statements. Copies of this announcement are not being made and may not be distributed or sent into the United States, Canada, Australia, Japan or any other jurisdiction in which such distribution would be unlawful or would require registration or other measures.

In any EEA Member State that has implemented Directive 2003/71/EC (together with any applicable implementing measures in any member State, the "Prospectus Directive"), this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive.

This announcement is only directed at (a) persons who are outside the United Kingdom; or (b) investment professionals within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (c) persons falling within Article 49(2)(a) to (d) of the Order; or (d) persons to whom any invitation or inducement to engage in investment activity can be communicated in circumstances where Section 21(1) of the Financial Services and Markets Act 2000 does not apply.

Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to) forecasts, projections and estimates, statements of management's plans, objectives and strategies for the Company, such as planned expansions, investments or other projects, management, as well as statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized.

No assurance can be given that such expectations will prove to have been correct. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.