Iceland’s WOW Air starts new bid to amend, extend floaters for buyout

By Susanna Moon

Chicago, Dec. 17 – WOW Air hf. is seeking holder approval to amend its €60 million of outstanding senior secured floating-rate notes due Sept. 24, 2021 by way of written procedure that will remain open until 11 a.m. ET on Jan. 17.

The issuer is also looking to extend the maturity by five years from issue in 2018 from three years. The final maturity may be extended to six years after issue if the issuer pays a fee of €1 million to bondholders on a pro rata basis.

The consents are needed for the proposed acquisition of some of the issuer’s shares by Indigo Partners LLC, a private equity firm, according to a notice by Nordic Trustee & Agency AB as agent.

The amended terms exclude any put options; state that the bonds are unsecured and release the pledge over the shares; strike the cross acceleration as an event of default; remove the change-of-control put option as long as the Indigo investor remains a shareholder and/or a bondholder; remove the restrictions on disposal of assets; drop the interest account requirement of 12.5% of par; strip the financial covenants and maintenance covenants and incurrence test; reverse the prohibition on incurring financial debt; allows the issuer to pay an annual management fee to its shareholder of up to $1.5 million as well as to make payments of interest and principal on the shareholder debt, as opposed to previous terms; and sets the first call date to Dec. 31, 2019.

The quorum required is at least 50%, and the majority needed is 66 2/3%. The record date is Dec. 20.

The issuer signed a term sheet on Nov. 29 for the proposed deal.

The investment also requires due diligence, which was obtained, and negotiations with aircraft lessors.

Also, Indigo is considering the issue of a new super senior convertible loan to the issuer to fund the recovery of its business. In all, Indigo’s investment would be for an amount up to $75 million, the release noted.

The backdrop to the deal is the issuer’s liquidity issues caused by “a challenging external operational environment for airlines in general, with high oil prices and persistently low yields and fierce competition, [and] 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 issuer. For example, the issuer’s credit card processor has significantly increased the cash holdback applicable to ticket sales for which air travel has not yet been provided.”

Under the terms, the acquisition must close by Feb. 28.

For questions to the issuer, e-mail bjarki@wow.is or call +354 861 6496. For questions to the agent, e-mail voting.sweden@nordictrustee.com or call +46 8 783 79 00.

As reported Dec. 3, the issuer previously withdrew its request to amend the notes in connection with the proposed acquisition of the company by Icelandair Group hf.

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 that 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.

The notes were issued in 2018.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.