Clarifications regarding the Notice of Written Procedure
The following letter has been sent to WOW air´s bondholders.
Reference is made to the market announcement of WOW air (“WOW“), dated 29 November 2018, of the signing of a term sheet for the proposed investment of Indigo Partners LLC ("Indigo Partners")* in WOW air and the Notice of Written Procedure sent to bondholders dated 14 December 2018.
Following discussions with bondholders over the past weeks, WOW wants to make the following clarifications regarding the investment and conditions related to the WOW bonds and warrants.
Should the investment be completed as planned, the actual investment amount will depend on the capital needs of the business through the turn-around of WOW. Indigo Partners intends to, and their interests are also aligned to, adequately capitalize WOW through the turn-around as they have done before with other successful aviation investments they have made. Indigo Partners has repeatedly demonstrated that they are long-term and patient investors, for example with their investments in Wizz air (14 years), Volaris (8 years) and Frontier Airlines (5 years).
When concluded, the investment will primarily be in the form of a convertible loan with a 10-year maturity, whereby annual interest will be, at Indigo Partners’ election, payable in kind or in cash on an annual basis. The principal and all accrued interest will be payable at the loan’s maturity. The initial shareholding of Indigo Partners will be 49%. Subject to foreign ownership regulations, Indigo Partners could obtain 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. 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.
The proposed carve-out from restricted payments for an up to USD 1.5m annual consulting fee relates to a potential fee payable to Indigo Partners and/or their affiliates for potential advisory services. Other restrictions on payments to shareholders, including dividend restrictions, remain as described in the terms and conditions of the bond prospectus.
As highlighted in the Notice of Written Procedure it is a firm condition for the transaction to be completed that in addition to the required changes in the bond terms and conditions, that all outstanding warrants are cancelled. There is therefore no option of a partial cancellation of the warrants.
It is the assessment of WOW that accepting these changes is in the best long term interests of bond holders, WOWs employees, vendors and other stakeholders.
On behalf of WOW,