DP Aircraft I Limited Company Update (6965M)
May 13 2020 - 1:00AM
UK Regulatory
TIDMDPA
RNS Number : 6965M
DP Aircraft I Limited
13 May 2020
13 May 2020
DP Aircraft I Limited (the "Company")
Company Update
Further to the Company's announcement of 9 April, the Board of
DP Aircraft I Limited provides the following update regarding its
discussions with its two lessees, Thai Airways and Norwegian Air
Shuttle, and its lending banks.
Thai Airways
As adverted to in the Chairman's Statement contained in the
Annual Report for the year ended 31 December 2019, which was
published at the end of last month, the Company has agreed a rent
deferral arrangement with Thai, commencing on 29 April 2020.
Pursuant to this arrangement, lease rental payments representing
approximately US$3.4m in aggregate are being deferred, with the
deferred amounts to be paid back in twelve equal monthly
instalments, along with interest accruing thereon, by November
2021. This is subject to signing of final documentation. The
Company's debt repayment obligations in respect of the assets
leased to Thai remain unchanged; and the Company's lending banks in
relation thereto have given their approval to this deferral
arrangement.
Thai Airways made its first lease repayment for the adjusted
amount in respect of April on its due date.
Norwegian Air Shuttle
As has been widely reported, Norwegian Air Shuttle has been
offered financial support by the Norwegian government in an amount
worth up to NOK3bn (approximately GBP230m) subject to certain
pre-conditions, among them agreement from Norwegian's bondholders
and lessors to swap their debt and lease payment rights for equity
in Norwegian. The Board and its advisers have been in negotiations
with Norwegian regarding this proposal, and have agreed to the
equity swap on the following basis:
- All of Norwegian's payment obligations until 30 June 2020 are
to be waived to the extent that they have not already been met; and
from July 2020 to March 2021 a 'power by the hour' arrangement will
instead apply. Under this arrangement, Norwegian will only pay
lease rentals in respect of the two assets which it has leased from
the Company to the extent that they actually operate them.
- The 'power by the hour' arrangement will come to an end on 31
March 2021. Thereafter Norwegian will make monthly lease payments
to the Company again, at a reduced rate to that which has applied
to date, reflecting the downward pressure on market rates for lease
rentals that is widely anticipated in the aftermath of the Covid-19
crisis.
- In addition to monthly lease rental payments the Company will
receive equity in Norwegian, with the number of shares to be
calculated by reference to the monies which are being waived and/or
forborne by the Company as a result of the 'power by the hour'
arrangement and the reduced monthly rental amount from April 2021.
The shares are to be provided to the Company in two tranches over
the coming twelve months, with the first tranche expected to be
allotted later this month and the second tranche in April 2021. The
first tranche of shares will have lock-up dates attached allowing
partial sales in August and October 2020, with the Company free to
dispose of all such shares on any date falling on or after 9
December 2020.
- The shares in Norwegian will be pledged to the lending banks
for as long as loan deferrals are outstanding, and accordingly any
sale of shares during that time will require the prior consent of
the banks.
Norwegian is now in the process of finalising approval from its
shareholders, bondholders and lessors for implementation of the
proposed debt for equity swap. Norwegian received formal approval
from three of its four bondholder groups for the proposal at a
bondholder meeting held on 1 May, and has subsequently reached
agreement with the other group; a further and final bondholder
meeting is now expected to be held on 18 May. Norwegian has also
confirmed that it has received sufficient support from lessors for
the swap to satisfy the condition relating thereto in its proposal
to bondholders. An extraordinary general meeting of Norwegian's
shareholders on 4 May overwhelmingly supported the debt to equity
proposition, with over 95 per cent. of votes cast in favour of the
proposal. The arrangements agreed between the Company and Norwegian
as described above will not come into effect until final bondholder
approval has been given on 18 May.
The Company's lending banks in respect of the assets leased to
Norwegian have given their approval to the arrangements described
above subject to documentation being finalised, and at the same
time have agreed to certain adjustments to the Company's repayment
obligations in relation thereto. Repayments of principal due during
the period from May 2020 to March 2021 will be deferred, and the
profile of debt service for the period starting from 1 April 2021
will be adjusted to reflect the proposed reduction in Norwegian's
monthly lease payments. All deferred amounts must be repaid by 30
June 2025 at the latest (with prepayment permissible without
charge); and interest on deferred amounts will be payable on a
floating rate base calculated as 1-Month Libor plus cost of funds
plus increased margin.
The Board will continue to monitor the situation with regard to
its lessees, and will provide a further update to shareholders as
and when there are any further material developments. Shareholders
should note that the Board's decision to suspend dividend payments
remains unchanged. This position is unlikely to be reviewed until
there is greater clarity as to both the ongoing financial position
of its two lessees and the broader macroeconomic backdrop in the
context of the Covid-19 crisis; and will need to be agreed in
consultation with the Company's lending banks.
For further information please contact:
Aztec Financial Services (Guernsey) Limited, Company
Secretary
+44 1481 748833
Kellie Blondel / Laura Dunning
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contact rns@lseg.com or visit www.rns.com.
END
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