Icelandair to redeem one-third of bonds due 2021 at 101 on Jan. 15

By Susanna Moon

Chicago, Jan. 2 – Icelandair Group hf said it issued a call for one-third of its senior bonds due 2021.

The notes will be redeemed on Jan. 15 at 101 plus accrued interest, according to the notice.

The record date is Jan. 8.

The issuer said on Dec. 3 that it was asking to amend its $190 million bonds due 2021 by way of written procedure until 11 a.m. ET on Jan. 4. The amendments were approved on Dec. 21 by holders of more than 66 2/3% of the notes.

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

Bondholders had temporarily waived the gross leverage covenants until Nov. 30.

The company said on Nov. 30 that it was planning to address the covenant breach under the notes and asking holders to waive the maintenance tests and gross leverage through June 30, 2019.

“Despite the covenant breaches, Icelandair Group’s financial position remains strong,” according to a previous company update.

“In recent weeks a number of measures have been taken to support further profitable organic growth and to build a strong company for the future,” the company added.

The proposal also included the following:

• The issuer will repurchase one third of the outstanding bonds by Jan. 15 at a price of 101%;

• The issuer may call the bonds from Feb. 1 through Dec. 31, 2019 at a price of 101.5% if the option is exercised from Feb. 1 through March 31 or at 102% if exercised from April 1 through Dec. 31, 2019;

• Bondholders may put the bonds at 102.5% from June 30, 2019 through July 15, 2019;

• The maintenance tests clause will be amended to read the lower of $100 million or the outstanding amount under the bonds; and

• The issuer will forgo any restricted payments during the waiver period.

DNB Markets is the financial adviser.

For questions, email bogi@icelandairgroup.is or call +358 40 590 4040. For questions to the agent, email voting.sweden@nordictrustee.com or call +46 8 783 79 00.

The temporary waiver for the gross leverage covenants was conditional on reaching a long-term agreement with the bondholders by Nov. 30, the company previously said.

Nordic Trustee & Agency AB is the agent.

As announced Nov. 16, the company’s trustee said that an event of default “has occurred and is continuing” under the $23.66 million of outstanding 4¼% bonds due Jan. 1, 2020.

The issuer has failed to fulfill its obligations under the bond terms for the maintenance tests for the third quarter of 2018, but the agent has decided to wait to take action while awaiting the outcome of the written procedure or other instructions from the bondholders, according to a previous notice by Nordic Trustee & Agency AB.

The company said on Nov. 29 that its planned acquisition of WOW Air had been canceled.

At the shareholder’s meeting on Nov. 30, the company asked for authorization to increase the share capital of Icelandair Group “in order to prepare the company for further organic growth and to strengthen its financial position.”

Icelandair was authorized to issue up to 625 million new shares, equal to 12.5% of the current number of outstanding shares, to existing shareholders in two offerings in December and in March 2019.

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

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