WOW Air pulls bid to amend floaters for buyout by Icelandair

By Susanna Moon

Chicago, Dec. 3 – WOW Air hf. has withdrawn its request to amend its €60 million of outstanding senior secured floating-rate notes 2018/2021 in connection with the proposed acquisition of the company by Icelandair Group hf, according to a notice by Nordic Trustee & Agency AB.

The voting deadline was 11 a.m. ET on Dec. 6. The record date is Nov. 15.

As announced, Icelandair canceled its planned acquisition of Wow air on Nov. 29 after issuing a press release Nov. 26 saying that the conditions in the share purchase agreement were unlikely to be met by the shareholders meeting set for Nov. 30.

In the solicitation announced Nov. 13, WOW Air was asking holders consent to the release of the security over the shares in the issuer and to waive all defaults under the bonds caused by the acquisition.

Icelandair entered into a share purchase agreement Nov. 5 to purchase all shares of the issuer and the issuer’s shareholders are now looking to procure amendments and waivers for the bonds so that they are allowed to sell the shares to Icelandair.

When the notes were issued Sept. 24, the company and its managers were “confident the liquidity raised would suffice until break even was reached and cash flow became positive.”

Since the issue, however, “the condition of the local and global airline market has deteriorated, which has also affected the issuer’s liquidity position, [which] has deteriorated considerably over the past few weeks,” the release noted.

“Challenging external operational environment for airlines in general, with high oil prices and persistently low yields and fierce competition, was enhanced with the recent bankruptcy of Primera air. This has led to rapidly deteriorating liquidity condition with increasing conservatism among creditors resulting in worsening in credit terms for the company.”

As a result, the company had decided to sell of its shares “to ensure continued operation and the possibility to continue to service its debt and obligations to its investors in the senior secured bond loan.”

After the deal, the issuer was to become a subsidiary of Icelandair, and the companies would have continued to operate under separate brands.

Wow is an Iceland-based low-cost air carrier. Icelandair is a Reykjavik, Iceland-based airline company.

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