WOW air (Reykjavik Keflavik) says Indigo Partners is planning to acquire a 49% stake in the carrier as an initial investment.
In a letter to bond holders dated January 9, WOW air founder and chief executive Skuli Mogensen said that once a deal has been done, the US low-cost carrier specialist's investment will primarily be in the form of a convertible loan with a 10-year maturity. Annual interest on the loan will be payable in kind or in cash on an annual basis. The principal and all accrued interest will be payable on the loan's maturity.
Though its initial shareholding in the Icelandic LCC will be 49% initially, subject to EU foreign ownership regulations, Indigo Partners may then gain additional equity should the conversion option be exercised during the tenor of the loan.
"The treatment of the outstanding subordinated loan from the current shareholder is under discussion and may be converted into equity before the investment by Indigo Partners or remain in place," Mogensen said. "If it remains in place, it will continue to be junior to the bonds and will be restructured so there will be no cash flow during the period the WOW bonds are outstanding."
Indigo had earlier indicated it could invest up to USD75 million in the carrier conditioned on certain amendments and a waiver being made to the terms and conditions of WOW Air's EUR100 million Senior Secured Floating Rate Bonds for 2018/2021.
