Icelandair asks holders to waive covenant breach by written procedure

By Susanna Moon

Chicago, Oct. 31 – Icelandair Group hf is asking holders to waive breaches under its $190 million senior bonds due 2021 until Nov. 30 by way of written procedure, according to a notice by Nordic Trustee & Agency AB.

The deadline for voting is 11 a.m. ET on Nov. 27. The record date is Nov. 5.

The quorum required is 20%, and the procedure requires a majority of 50% of the adjusted nominal amount.

The company said on Oct. 30 that it was in breach of the gross leverage covenants under the terms of its $190 million senior bonds due 2021 and its $23.66 million bonds due 2020.

The company said it has had a “constructive” dialogue with bondholders regarding a long-term solution and requested that the bondholders vote in favor of a temporary waiver of the covenant breach through November. The waiver would provide more time for the discussions.

The temporary waiver has support from bondholders representing a majority of the senior bonds due 2021, according to a Tuesday press release.

The company said it has also initiated talks with holders of the bonds due 2020 and expects to reach an identical long-term solution regarding those bonds. A temporary waiver of the covenants through November has support from over 85% of the bondholders, and the company will also continue discussions regarding a long-term solution, the release said.

Icelandair said that despite the covenant breaches its financial position remains strong. At the end of September, the company’s cash and short-term investments amounted to $184 million; the company’s equity was $575 million; and the equity ratio was 36%. Operating assets amounted to $674 million, and prepayments on the balance sheet due to new aircraft amounted to $176 million.

At the same time, the total interest-bearing liabilities amounted to $406 million, of which secured debt amounted to $194 million.

DNB Markets is acting as the company’s financial adviser.

Icelandair is a Reykjavik, Iceland-based holding company active in the airline and tourism industries.

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