Nordic Aviation’s creditors agree to shelve repayments on €6bn debt

Limerick-headquartered aircraft lessor has $2 billion in equity

Nordic Aviation: creditors have agreed to shelve repayments on its   debt for up to 12 months. Photograph: iStock

Nordic Aviation: creditors have agreed to shelve repayments on its debt for up to 12 months. Photograph: iStock

 

Aircraft lessor Nordic Aviation Capital’s creditors have agreed to shelve repayments on its $6 billion (€5.3 billion) debt for up to 12 months, the company confirmed on Thursday.

Limerick-headquartered Nordic sought to defer repayment of part of the principal and interest that it owes after Covid-19 travel bans forced airlines to which it had leased aircraft to suspended rent due to the company.

Nordic said creditors had unanimously agreed to hold off on demanding certain interest and principal repayments for the next six to 12 months.

The company will update the High Court on Friday and ask it to formally approve the scheme later this month.

Nordic owes creditors $6 billion and has $2 billion in equity. Shareholders, including the Lego foundation-controlled Kirkbi, the Government of Singapore Investment Corporation and Scandinavian investor EQT Partners, recently pledged to provide the company with $60 million in new equity.

The Irish company buys smaller aircraft used to fly short or “regional” routes, and leases them to airlines, using the rent they pay to repay the cash that it has borrowed to buy the aircraft. It owns about 500 aircraft and employs 100 workers.

‘Severely challenged’

Soren M Overgaard, Nordic’s chief executive, stressed that Covid-19 had hit the travel industry particularly hard.

“As is the case with other leasing companies, we have seen a number of our lessees severely challenged during the pandemic and we have granted them deferred payments of 40 per cent of our revenue in the past six months,” he said.

Nordic confirmed that the majority of its airline customers have asked it to defer some or all rent. In court last month, the company said it had collected just 20 per cent of the cash due from its clients.

Gareth Halpin, the company’s chief funding officer, said Nordic had held talks with 85 creditors to secure their agreement. He noted that lenders had been very supportive.

Irish solicitors McCann FitzGerald, global law firm Clifford Chance and investment bank Rothschild & Co advised Nordic.