PLAY Hits Funding Target with ISK 4 Billion in Share Commitments

iceland budget airline play

The Icelandic airline PLAY has secured share subscription commitments totalling ISK 4 billion ($29 million / €27 million), meeting its target before the annual general meeting scheduled for March 21, 2024. Additionally, the airline is advancing its listing to the Nasdaq Main Market in Iceland and planning a public offering to further bolster its capital.

Commitments pending approval at annual general meeting

In a press release yesterday, the Icelandic airline PLAY announced that it had secured new share subscription commitments totalling ISK 1.4 billion ($10 million / €9 million), bringing the total commitments to approximately ISK 4 billion ($29 million / €27 million). This achievement marks the fulfilment of the company’s target ahead of its annual general meeting, which is scheduled for March 21, 2024.

(A share subscription commitment means that investors have pledged or committed to buying a specific number of shares from the airline at a predetermined price before those shares are officially issued or made available to the public.)

The additional funds raised through these commitments come on the heels of previously announced commitments worth around ISK 2.6 billion ($19 million / €18 million). The final approval for increasing the company’s equity by this amount is now pending before the shareholders at the upcoming annual general meeting. The shares have been priced at a subscription rate of 4.5 ISK each.

To further enhance its capital base, PLAY’s board of directors is set to propose an additional public offering aimed at raising the equivalent of ISK 1.2 billion ($9 million / €8 million), also at a subscription price of 4.5 ISK per share. This offering will prioritise current shareholders in the event of an oversubscription. Notably, this forthcoming offering is exempt from the standard requirement of publishing a prospectus.

Listing upgraded to the Nasdaq Main Market

Amid these developments, the announcement also states that PLAY is making headway in its plans to upgrade its listing to the Nasdaq Main Market in Iceland, with expectations of concluding the process by the end of the second quarter. Birgir Jónsson, CEO of Fly Play hf., expressed his enthusiasm for the investor confidence shown in the airline’s equity raise.

“It has been a true pleasure to witness the positive reaction that investors have shown our equity raise. With the commitments we have now secured, in addition to the commitments from our largest shareholders already announced, PLAY has now secured new equity in the amount of ISK 4 billion. This number may be further increased following the public offering that is planned following the authorization from the company’s Annual General Meeting in March.

This equity raise substantially strengthens the company’s financial position and allows it to execute exciting growth opportunities and/or handle unexpected events. This is an important milestone for our good company and its employees. It is fascinating to experience how professionalism among the company employees is further enhanced. The group’s ambition is really special, and it is a privilege to work with this powerful group of PLAYers.”

Icelanders’ Home Equity Has Doubled in Five Years

apartments downtown Reykjavík housing

Icelanders are taking out more mortgage loans and their collective home equity has doubled in the last five years, Kjarninn reports. This according to data recently published by Statistics Iceland.

After debt was deducted, Icelanders’ combined home equity was ISK 4.034 billion [$29.031 million; €24.959 million] at the end of last year, which is double what it was in 2015. All total, 78% of Icelandic households’ equity is tied up in real estate.

The value of real estate owned by Icelanders has also increased dramatically in recent years. At the end of 2010, according to real estate assessment (fasteignamat), the total value of Icelander-owned real estate was ISK 2.353 billion [$16.933 million; €14.558 million], whereas at the end of 2019, this total had increased to ISK 5.648 billion [$40.645 million; €34.944 million]. This is a total value increase of 140%. These valuations are, however, only based on assessment value, not market value.

Housing loans are also dramatically increasing. Icelanders’ combined mortgage debt was ISK 1.614 billion [$11.615 million; € 9,985 million] at the end of 2019, which is an increase of 141 billion [$1.014 billion; €872.377 million] from the previous year. Housing loans have increased by ISK 352 billion [$2.533 million; €2.178 million] since 2016, or 28%. By contrast, between 2011 and 2016, loans taken out by the nation’s homeowners had only increased ISK 56 billion [$403.004 million; € 346.476 million], or 4.6%.

The trend of increased debt and higher real estate prices has continued in spite of this year’s economic shocks. According to the Central Bank of Iceland’s recent Financial Stability Report (in English), total household debt in Iceland amounted to nearly 79% of the GDP at the end of June, a percentage increase of just over 2% in the last year. From 2016 and up until this year, the nation’s indebtedness has been in line with economic growth.

According to the report, “Growth in household debt is driven by an increase in mortgage loans, while other debt has contracted in real terms, as it has in the past few years. Notwithstanding the uncertainty afoot, household demand for mortgage loans is still robust, owing to falling financing costs and stable real wages despite the economic contraction. In July, net new lending to households totalled nearly 32 b.kr., about 80% above the twelve-month average.”

Icelandic households’ asset position has, nonetheless, improved. Home equity, which accounts for assets in excess of debt, increased considerably last year and is now twice as much as the GDP. Ten years ago, home equity was equal to the GDP.