EQT-owned aircraft leasing company Nordic Aviation Capital is under heavy pressure as a result of the corona pandemic and the founder warns of a formal reconstruction.
At the same time, several major owners, including EQT, are not prepared to provide new capital injections to the struggling company.
The corona pandemic hit the aviation and travel sector hard, and EQT's portfolio company Nordic Aviation Capital, NAC, which leases passenger aircraft to over 70 airlines, was no exception.
The effects of the virus outbreak on operations led to NAC, which is based in Ireland, finding itself in payment difficulties towards its lenders.
At the end of July last year, lenders voted in favor of a settlement that meant that NAC was granted a six to twelve month deferral of its interest payments and amortizations. According to Danish financial newspaper Børsen, the debts amount to 38 billion Danish kronor, equivalent to 52 billion kronor.
EQT is the largest shareholder in NAC, which also includes founder Martin Møller, the Lego family's investment company Kirkbi and Singapore's sovereign wealth fund GIC. Together, the owners provided a capital injection of $60 million, approximately SEK 514 million, to NAC in June 2020.
But the debt settlement with the 80 lenders expires on June 30, 2021, and NAC is now working under strong time pressure to find a new solution.
At the same time, major owners EQT, GIC and Kirkbi are not prepared to provide new capital injections, reports Børsen. The company's founder, Martin Møller, tells the newspaper that the situation is "incredibly sad.".
”"If we don't get a solution, and there's no miracle, the next step is a formal reconstruction, and if that fails completely, there are even more difficult things on the horizon," he tells the newspaper.
In order to reach a new agreement with the lenders, Martin Møller tells Børsen that he is ready to inject more capital, which EQT and other major owners are not ready to do.
EQT does not want to comment on how it views NAC's chances of reaching a new agreement with the lenders.
”"We do not want to speculate on it, but even if EQT VI (EQT's sixth fund, Di's note) does not contribute additional capital, the fund will remain as a shareholder and continue to work with the other shareholders to assist NAC and Axiom Partners in their efforts to reach a good solution," writes Magnus Tornling, managing partner at EQT, in an email to Di.
What is behind EQT's decision not to raise more capital?
”"Despite strong and continuous support for the business, the global lockdown has had a devastating impact on NAC's operations. The company is considering, together with Axiom Partners (controlled by founder Mats Møller, Di's note), an alternative business plan based on the significantly reduced demand for their services," writes Magnus Tornling.
The company's founder, Martin Møller, warns that the next step is a formal restructuring. What consequences could this have for EQT?
”We do not want to speculate ahead – here and now, EQT VI continues to work together with other shareholders to assist NAC and Axiom Partners in their efforts to reach a good solution.”
EQT invested in Nordic Aviation Capital in October 2015. NAC states on its website that it is the world's largest regional aircraft leasing company with a fleet of 490 aircraft.
Source: di.se
