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.”

Draft Bill for Íslandsbanki Stake Sale Published

Minister of Tourism, Industry, and Innovation Þórdís Kolbrún Reykfjörð Gylfadóttir

The Icelandic Ministry of Finance and Economic Affairs has published a draft bill for the sale of the state’s 42.5% stake in Íslandsbanki. The bill, necessitating parliamentary approval, aims to reduce the Treasury’s financial risk and debt ratio.

Íslandsbanki prohibited from direct participation

Yesterday, the Ministry of Finance and Economic Affairs published a draft bill regarding the disposition of the state’s share in the Íslandsbanki Bank through the government’s online consultation portal. The draft authorises the minister, with Parliament’s approval, to dispose of the state’s share in Íslandsbanki. The state owns a 42.5% stake in Íslandsbanki.

The disposal of the share is planned through one or more tranches in a marketed offering, allowing the general public to participate, with sales to individuals given priority. The draft notes that it is important to consider market conditions for timing the offerings. According to the bill, Íslandsbanki is prohibited from directly participating in the sale, in line with recommendations from the National Audit Office.

“During the sales process, care must be taken to adhere to the fundamental principles of equality, transparency, efficiency, and impartiality. This obligation is specifically imposed on the minister … to ensure transparency in connection with the disposal, among other things, by proactively publishing information,” the memorandum notes.

State Financial Investments not involved

The bill proposes eliminating the role of the State Financial Investments in the sale of the shares. The Ministry states in the bill’s explanatory memorandum that the preferred option is to authorise the sale of Íslandsbanki under the control of the Minister of Finance and Economic Affairs through specific legislation. It will be up to the Parliament to decide which sale methods are authorised.

“The sale of the equity stake is considered quite urgent in order to reduce the financial risk of the treasury and to contribute to the main objectives of the public finance policy regarding the reduction of the treasury’s debt ratio.”

As noted by RÚV, nearly eight months have passed since the release of the Financial Supervisory Authority’s critical report on the state treasury’s sale of shares in Íslandsbanki. There were several issues with the sale process, and Íslandsbanki received a hefty fine for its role in the sale. Bjarni Benediktsson stepped down as Minister of Finance and Economic Affairs after the Parliamentary Ombudsman’s opinion was published and switched ministerial roles with Þórdís Kolbrún Reykfjörð Gylfadóttir.

Treasury Lost Out on “Significant Funds” with Íslandsbanki Sale

A professor at the University of Iceland’s School of Business has told RÚV that the state treasury forfeited “significant funds” in its sale of Íslandsbanki shares last March. Minister of Finance Bjarni Benediktsson rejects the idea that a higher share price could have been secured without “sacrificing other interests.”

Losses “obvious” shortly after markets opened

Dr Ásgeir Brynjar Torfason is an assistant professor at the University of Iceland’s School of Business. He focuses on accounting and finance. In an interview with RÚV earlier today, Ásgeir stated that the government had lost out on “significant funds” in its sale of Íslandsbanki shares last March. The losses were obvious shortly after the markets opened on the following morning.

Yesterday, the National Audit Office released a report concerning the sale. The report reviewed, among other things, the dissemination of information prior to the sale, the determination of the share price, the selection process for determining qualified investors, and the reliance on outside consultants.

The report – focusing on the technical execution of the sale and valuation of shares – did not pass judgement on whether any laws had been broken; the opposition has demanded that a parliamentary committee be entrusted with such an investigation.

Concerning such an investigation, Ásgeir Brynjar stated that it was important for independent institutions – such as the parliamentary commissioner, the National Audit Office, and the Financial Council – to supervise such a process:

“These institutions play a hugely important role for parliament, and given that the National Audit Office has brought these facts – which we suspected or feared – to light, it’s clear, after a thorough review, that the execution of the sale wasn’t sufficiently well handled … it’s as if the sellers were trying to get rid of something that they didn’t want to own in the quickest possible way, which isn’t good when you’re handling publicly-owned entities and trying to secure the best possible price.”

Welcomes the publication of the report, constructive criticism

In a separate interview with RÚV, Minister of Finance Bjarni Benediktsson stated that he did not want to place himself on a high horse and mete out responsibility following the National Audit Office’s report. According to Bjarni, there wasn’t much in the report that suggested wrongdoing on behalf of his Ministry.

“There were, however, many things, which were asserted last spring – that buyers had been hand-picked or that the bank had been subject to a fire sale, for example – which have been rejected.”

Bjarni added that it was good that the report had finally been published and that the many considerations detailed in the report were “unsurprising” given that they had been discussed last spring: “Dissemination of information in the run-up to the sale could have been better.” Bjarni also stated that the report made many useful points and that he welcomed any constructive criticism.

Finally, the Minister of Finance rejected the idea that the report was an indictment on the execution of the sale and stated that he “remained focused on the big picture,” namely that they had been successful in selling shares in the bank, securing diverse ownership, and a reasonable share price. “The sale is not above criticism,” Bjarni added, “but I think that it was largely successful.”

As noted in the RÚV article, the authors of the report suggest that a higher share price could have been secured, a suggestion that Bjarni rejects without sacrificing other interests: “We had several aims, among them diverse ownership. We got a pretty good price, and the report indicates that the financial interests of the government were safeguarded.”

Bjarni added that after the sale the government continues to be the majority owner of the bank, which now enjoys a higher valuation: “The fact that we managed to sell of over ISK 100 billion ($693 million / €672 million) with this group of owners, I just say: ‘Well done.’”

Execution “Not Good Enough,” Minister of Business states

Vísir also published an interview with Minister of Culture and Business Affairs Lilja Alfreðsdóttir today. Lilja stated that it was clear that the execution of the sale was “not good enough” and that this was confirmed by the National Audit Office’s excellent report. Lilja added that it was disappointing that the experts had not handled the sale, which shouldn’t be overly complicated, in a better way.

“The execution wasn’t good enough. We can see that the valuation should have been better as well as the execution of the sale, for which the Icelandic State Financial Investments are responsible,” Lilja observed.

PM Katrín Jakobsdóttir has also weighed in on the Audit Office’s report: “First and foremost, I’m disappointed in the execution itself: one of it being the price, and the difference therein. But first and foremost I’m disappointed in how this could affect trust in Iceland.”