Nordic Aviation Capital Files Chapter 11, Receives $170MM in DIP Financing

Nordic Aviation Capital entered into a restructuring support agreement with its equity holders and lenders holding more than 73% of the company’s approximately $6.3 billion in debt obligations. The terms of the RSA establish the framework for a consensual financial restructuring that will restructure Nordic Aviation Capital’s debt obligations and provide additional capital through a new equity rights offering. To implement the financial restructuring, the company filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia.

The RSA includes the restructuring of Nordic Aviation Capital’s debt obligations (including the conversion of some of the group’s debt to equity) with an infusion of $537 million in additional capital through a $337 million new equity rights offering and a new $200 million revolving credit facility. The company also obtained an additional $170 million debtor-in-possession financing facility from its existing creditors to help fund operations during the Chapter 11 process. The additional capital will serve to support the company’s liquidity position and its plans to pursue growth in purchasing aircraft. Additionally, the RSA will allow the company to continue to satisfy its obligations to its employees, customers and suppliers, and to provide lease management services and deliver aircraft throughout the Chapter 11 process.

In conjunction with the petitions, Nordic Aviation Capital filed a series of motions, which, if approved by the court, will enable the company to operate its business in the ordinary course throughout the Chapter 11 process. These motions will also allow Nordic Aviation Capital to continue to honor obligations to its employees, customers and suppliers on previously agreed upon schedules and terms.

Following its emergence from the Chapter 11 process, the reorganized company will be majority-owned by its largest creditors, who will invest new equity capital in the business. Martin Moller, founder and chairman of Nordic Aviation Capital, and the company’s existing shareholders are supportive of this transition in ownership. A newly reconstituted board of directors will be appointed upon emergence.

“NAC is taking this proactive step in the U.S. because we believe it is the most efficient and effective way to implement a consensual and comprehensive financial restructuring,” Justin Bickle, vice chairman of Nordic Aviation Capital and chairman of its restructuring committee, said. “With the strong support we’ve received from our lenders to date, we are pleased to be entering the Chapter 11 process with a restructuring support agreement in place to implement the financial restructuring of the group that will position NAC for future growth and success as industry conditions continue to improve.”

“As my 30-year chapter with NAC comes to a close, I am comforted to see the significant support demonstrated by the lenders and their confidence in NAC’s business model,” Moller said. “I have the utmost confidence in the company’s resilience and ability to continue to serve customers in a sustainable manner throughout this process and beyond.”

“This is a positive first step to position NAC for longer-term success and provides financial resources to develop the business,” Norman C.T. Liu, president and CEO of Nordic Aviation Capital, said. “Our aim is to maintain our leadership position in regional aircraft leasing and expand into adjacent single aisle areas. During the Chapter 11 process, the NAC team will work hard to serve our many airline customers. I would also like to thank our employees for their dedication and our many business partners for their support.”

Kirkland & Ellis is serving as Nordic Aviation Capital’s restructuring counsel, while Clifford Chance and William Fry are serving as legal counsel, Ernst & Young is serving as restructuring advisor and Rothschild & Co is acting as investment banker.

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