NOK to Extend the ฿3Bn Utilization Period, Allowing Contract Termination Anytime

Nok Airlines Public Company Limited (NOK) announced that the Board of Directors’ meeting, under a special agenda on 30 June 2020, has resolved to approved to propose to the 2020 Annual General Meeting of Shareholders to consider the ratification of the extension of utilization period of facility in category of obtaining a financial assistance under the existing credit limit of Baht 3,000 million from Mrs. Hatairat Churangkul, the major shareholder of NOK, from not exceeding 12 months from the date of Facility Agreement (i.e. 14 May 2019) to not exceeding 48 months until 30 September 2020, as NOK has estimated that the company can administer financial liquidity and proceed with the amendment to the Facility Agreement until it is complete by the aforementioned date.

 

Above, the Lender has considered overall economic situation, the potential of debt repayment of NOK operating airline business and risk on the fact not to received debt repayment on the ground of being a clean loan, and viewed that before approving NOK to drawdown the loan in each time, it shall be proposed to amend the Facility Agreement in order to prevent risk from debt payment default of NOK. In this regard, the Parties acknowledge and agree that the Lender shall have the right to terminate and/or immediately cancel the outstanding credit limit, although there is still the outstanding credit limit which is to be effective until 30 September 2020.

 

The company also approved to the entry into the connected transaction in category of obtaining a financial assistance under the existing credit limit of Baht 3,000 million, by granting right for the Lender to terminate the Facility Agreement from 1 October 2020 to 14 May 2023.

 

Due to the outbreak of COVID-19, closed airspace of international flight and recession of airline business and overall tourist industry which it is uncertain whether the situation will be better, as well as a concern of the re-outbreak of COVID-19 in foreign countries, NOK might not seek for other sources of fund, for example borrowing money from financial institution, in the short run or seek for source of loan with the replaceable conditions instead of the existing loan from the Lender.

 

However, the Board of Directors’ meeting has carefully considered, with good faith under the principal of fiduciary duties, and viewed that the Entry into the Transaction on Granting Right for the Lender to Terminate the Facility Agreement must be immediately proceeded because of a necessity to utilize cash as working capital sufficient for operation, it, therefore, is not able to wait for the 2020 Annual General Meeting of Shareholders to be held on 6 August 2020 to approve it.

 

In this regard, were NOK not utilize the loan in the short future, it shall incur the deficit of the cash flow and shall affect the financial position and operating result of the company materially to the extent that might incur the company’s business interruption. Further, the entry into the said transaction is not the undue transfer of interest between the company and connected person.

 

Although the Board of Directors’ meeting had approved the Entry into the Transaction on the Extension of Utilization Period of Facility, NOK still has duty to obtain a ratification from the shareholders’ meeting with the votes not less than three-fourths of the total votes of the shareholders attending the meeting and entitled to vote, excluding the votes of shareholders having vested interest.

 

In the matter of the entry into the transaction on financial assistance under Baht 3,000 million and granting right for the Lender to terminate the Facility Agreement will propose to the 2020 Annual General Meeting of Shareholders to consider the ratification on 6 August 2020.