Discount transatlantic carrier Norwegian Air will seek to
shore up its balance sheet through a rights issue of 3 billion Norwegian
kroners (about $353 million).
Norwegian announced the move in conjunction with the Tuesday
release of preliminary 2018 financial results, which showed an operating loss of
3.8 billion kroners (about $447 million), excluding interest and taxes.
The rights issue will be fully underwritten, with major
backers including Norwegian CEO Bjorn Kjos, Norwegian chairman Bjorn Halvor
Kise and shipping industry titan John Fredrikson, whose net worth is estimated
by Forbes to be $7.1 billion.
A rights issue is a tool used by cash-light companies in
which they raise money by granting shareholders the right to buy new stock at a
The move by Norwegian follows International Airlines Group's
decision last week to sell its 3.93% stake in Norwegian and make no further
effort to purchase the discount carrier. Last spring, Norwegian rebuffed two
IAG takeover bids.
Going forward, Kjos said Norwegian will shift its focus from
growth to cost savings and a reduction in capital expenditures. Already this
month, the carrier said it would close bases in Fort Lauderdale; Providence,
R.I.; Stewart Airport in Orange County, N.Y.; as well as in Spain and Italy.
Other cost-saving initiatives are a postponement of aircraft
deliveries, aircraft divestments and route network optimization.