Icelandair Group hf. – Bondholders’ Meeting for bond category ICEAIR 15 1

Reference is made to previous announcements by Icelandair Group hf., (the “Company” or the “Issuer”), in which it was published that the Company’s unsecured bondholders have temporarily waived the financial covenants set out in clauses (iii) Debt ratio and (iv) Debt ratio II, of the unsecured bond, identified as ICEAIR 15 1, ISIN IS0000025427, in the amount of USD 23,660,000, (the “Bonds” or the “Issue”), conditional on the Company reaching a long-term agreement with the bondholders, no later than 30 November 2018.

At the Issuer's request, a bondholders’ meeting is convened for bondholders of the Bonds on 8 January 2019, at 4:30 pm on Icelandair Hotel Reykjavík Natura.

The agenda of the meeting is to decide on a proposal which is in line with the proposed change of Terms and Conditions, dated 3 December 2018, on unsecured bond category NO0010776982 in the amount of USD 190 million. The change in terms contains that one third (1/3) of the ICEAIR 15 1 Bonds shall be payable no later than 15 January 2019 and an exemption from financial covenants shall be granted until 30 June 2019.

Request will be made for amendment and restatement of the Terms and Conditions of the Bonds ICEAIR 15 1.

New clause shall be as follows:

The Issuer shall no later than 15 January 2019, redeem one third (1/3) of the outstanding Bonds at a price equal to 101.00% of the Nominal amount.

New clause shall be as follows:

The Issuer may redeem all or only some of the outstanding Bonds, during the period from 1 February 2019 to (and including) 31 December 2019, with the condition that 40% of the Bonds shall remain outstanding after such redempetion, at a price equal to;

101.50%, of the Nominal amount together with accrued but unpaid interest, if exercised during the period from 1 February 2019 to (and including) 31 March 2019
102.00%, of the Nominal amount together with accrued but unpaid interest, if exercised during the period from 1 April 2019 to (and including) 31 December 2019.
The Issuer is authorized to redeem the Bonds in full in accordance with the Bonds terms & conditions after 31.12.2019.

New clause shall be as follows:

Each Bondholder shall between 30 June 2019 to (and including) 15 July 2019, have the right to request that all, or only some, of the Bonds shall be repurchased at a price equal to 102.50%, together with accrued but unpaid interest. The Bonds shall be repurchased by the Issuer no later than 31 July 2019.

A waiver shall be granted from the clause on breach of covenants.

“(i) Breach of covenants: The Issue may be declared to be in default upon the occurrence of a breach of any of the financial or Issue specific covenants as set out in the Terms and Conditions of the Issue.”

This clause shall be amended as follows:

“(i) Breach of covenants The Issue may be declared to be in default upon the occurrence of a breach of any of the financial or Issue specific covenants as set out in the Terms and Conditions of the Issue. The Issuer is granted a waiver from acceleration due to a breach of financial covenants from 30 September 2018 to (and including) 30 June 2019, regarding debt ratio and debt ratio II.”

Following clauses on financial covenants shall be amended:

This clause shall be amended as follows:

(ii) Cash and cash equivalent: The Company’s cash and cash equivalent position at the end of each quarter must cover all debt service payments falling due in the next six months thereafter. The aforementioned notwithstanding, cash and cash equivalents of the Issuer must never be less than USD 100,000,000 in the period from 30 September 2018 to (and including) 30 June 2019. Aftar that, the Company’s cash and cash equivalent position shall never be less than USD 50,000,000.

Issue specific covenants shall be amended so that the Issuer cannot make any dividend payments until and including 30 June 2019.

Following clause on an issue specific covenant shall be amended:

(i) Dividend payments: The Issuer is authorized to pay dividends provided that the Issuer is current on all issued debt and will remain so for the foreseeable future. The Issuer declares that the Issuer will not pay dividends, neither in cash nor by other means, unless the Issuer is in full compliance with the financial covenants stipulated under the Bonds and will remain so, according to the Issuer’s projections, for a period of twelve months immediately following the dividend payment.

This clause shall be amended as follows:

(ii) Dividend payments: The Issuer is not authorized to pay dividends until and including 30 June 2019. After that Issuer is The Issuer is authorized to pay dividends provided that the Issuer is current on all issued debt and will remain so for the foreseeable future. The Issuer declares that the Issuer will not pay dividends, neither in cash nor by other means, unless the Issuer is in full compliance with the financial covenants stipulated under the Bonds and will remain so, according to the Issuer’s projections, for a period of twelve months immediately following the dividend payment.

New clause shall be as follows:

Information retrieval: The Issuer and Bond Agents may at any time obtain information about the registered Bondholders from Nasdaq Iceland.

The voting rights of bondholders at the meeting are based on the position on the day of this meeting announcement that was published on 21 December 2018.

Changes to the Terms and Conditions of the Issue can only be implemented with the consent of a qualified majority of bond holders, representing 85% of the Issue amount outstanding at a minimum, as well as the approval of the Issuer.

In accordance with the Bonds Terms and Conditions, the Issuer will notify electronically through the news service of NASDAQ's in Iceland, if any amendments are made to the Terms and Conditions of the Issue.

Registration of meeting guests, distribution of ballots and other meeting documents will be found at the meeting venue from 16:00 on the day of the meeting.