Icelandair Restructuring Progresses But Talks With Creditors Continue
June 29 2020 - 6:47AM
Dow Jones News
By Dominic Chopping
Icelandair Group Hf said Monday that it is making progress with
shareholders over a financial restructuring of the company as it
seeks government aid, but that talks with certain creditors are yet
to yield results.
The carrier is seeking to launch a share offering to raise up to
$200 million as well as the conversion of debt into equity, both
prerequisites for government support in the form of a credit-line
guarantee.
New long-term collective-bargaining agreements have been reached
with the unions of pilots, cabin crew and mechanics, while work on
terms with the Icelandic government, along with Islandsbanki and
Landsbankinn, regarding a government guaranteed credit facility is
in progress.
However, the credit facility will be conditional on the company
receiving sufficient concessions from creditors and the successful
conclusion of the planned share offering, it said.
"Icelandair Group has received positive feedback from most of
its creditors, who remain willing to work with the company through
this process. However, negotiations with certain pivotal
counterparties have not been concluded," the airline said.
Those counterparties include aircraft lessors and a credit card
acquirer.
Icelandair added that it is still negotiating with Boeing over
further compensation due to the Boeing 737 MAX grounding and the
state of future deliveries of aircraft.
If agreements can be completed with the remaining shareholders
in July, the company intends to initiate an offering of new shares
in August. However, if these negotiations are unsuccessful, the
company will need to initiate a new phase of its restructuring
process without the government-guaranteed credit facility.
This process could last for up to 12 months and the company
would be required to seek deferral of any payments to financial
creditors.
The cash position of the company is currently around $150
million, which is in excess of three-month fixed operational cost
in the current environment.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
June 29, 2020 06:32 ET (10:32 GMT)
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