Many Íslandsbanki Buyers Have Already Sold for Profit

Minister of Finance Bjarni Benediktsson

Of the 207 investors who purchased shares in Íslandsbanki bank in a private share offering last month, 132 have already sold some or all of their stake in the formerly state-owned bank, Kjarninn reports. The sellers have made a cumulative profit of ISK 1.6-2.1 billion [$12.3-16.2 million; €11.4-15 million]. Finance Minister Bjarni Benediktsson had previously stated that the aim of the share offering was to acquire long-term investors in the bank.

Íslandsbanki was fully owned by the government until last year, when it sold a 35% stake in the bank, something that had been on the government agenda for years. While that first offering was open to the public, last month’s offering was solely open to professional investors. The second sale was successful, reducing the government’s stake in the bank from 65% to 42.5%. The government has been criticised for the latter share offering’s lack of transparency, and for the 5% discount buyers received on the shares’ market value.

Foreign purchasers sold within days

Notably, six foreign investment funds that were invited to take part in the offering sold all of their purchased shares in the bank within three days of listing, at a significant profit. These funds also participated in last year’s public share offering, meaning they have turned quick profits on the sale of the bank’s shares for a second time. Those funds include Silver Point Capital, Fiera Capital, Lansdowne Partners, and Key Square Partners.

According to the shareholder lists Kjarninn has in its possession, most of the “smaller” investors that took part in last month’s share offering have already sold their shares in the Íslandsbanki. In total, 59 investors were permitted to buy shares for under ISK 30 million and another 79 for under ISK 50 million. Among the purchasers who are no longer listed as shareholders of Íslandsbanki are employees and owners of the consulting company that was hired to manage the stock offering.

Some larger investors who took part in the offering, who bought shares worth several hundred million ISK, have also sold their stake in the bank. This includes Steinn Holding Company, owned by Samherji seafood company CEO Þorsteinn Már Baldvinsson and his ex-wife.

Finance Minister’s father still a shareholder

One particularly controversial buyer in the offering was the company Hafsilfur, owned by Benedikt Sveinsson, the father of Finance Minister Bjarni Benediktsson. The Finance Minister is responsible for the sale of Íslandsbanki, according to law. Hafsilfur is still listed as a shareholder in Íslandsbanki, and its shares have increased in value by around ISK 5 million since the share offering.

Pension funds and other institutional investors have bought up a large part of the shares that smaller investors have sold at profit since the share offering. It was previously reported that pension funds requested to were allotted fewer shares in the offering than they had requested.

The Central Bank of Iceland has stated it is investigating the sale.

Icelandair Aims to Raise ISK 29 Billion Through Public Stock Offering

icelandair757

Icelandair hopes to raise up to USD 200 million [ISK 29 billion; €1.82 million] in equity through a public stock offering in June. The company’s board of directors announced their intentions, which they say is “an important part of the financial restructuring of Icelandair Group,” in a statement sent to the Icelandic Stock market on Thursday night.

If approved at the company’s shareholders’ meeting in May, the stock offering would “enable the Board to increase the share capital of the Company by up to 30,000 million new shares,” reads the statement. “The Board further proposes that current shareholders waive their pre-emptive rights to the new shares. The public, along with other investors, will thereby be given the opportunity to subscribe to new shares in the Company. Furthermore, the Board will have unilateral authority to determine the allocation of new shares, but efforts will made to provide full allotment to existing shareholders and employees.”

See Also: Icelandair Lays Off Record 2,000 Employees

The announcement comes in the wake Icelandair laying off 2,000 employees on Tuesday in the single largest layoff in Icelandic history.

“Icelandair Group has been in close contact with the Icelandic Government” during its restructuring process, concludes Thursday’s statement, which also notes that the Icelandic government “is willing to consider granting the Company a credit line or providing a guarantee for such credit line conditioned upon the completion of the share offering.”

Icelandair will publicly announce the price of the new shares, as well as related terms and conditions, following the proposal’s presumed approval at its upcoming shareholders’ meeting.

Financial Supervisory Authority Demands Closure of Crowdfunding Website

WOW air

A group purportedly aiming to resurrect WOW air has been ordered to close their crowdfunding website by Iceland’s Financial Supervisory Authority. The site is requesting 10-20,000 shareholders for the purpose of resurrecting the recently-bankrupt airline or founding a new low-cost airline to take its place. RÚV reported first.

According to a statement released by the Financial Supervisory Authority, the crowdfunding initiative does not fulfill the requirements of the Act on Securities Transactions. The statements ends by warning investors that they do not enjoy the same legal protection of their purchases via a private initiative as when they purchase stocks in a company that is registered on the stock market.

WOW’s former CEO Skúli Mogensen says he is in no way connected to the effort but is following closely. WOW air officially ceased operations on March 28, leaving thousands of passengers stranded and some 2,000 locals unemployed.

Icelandair Explains Steep Price Hikes Following WOW Closure

Icelandair

Icelandair issued a statement assuring customers that no price changes were going into effect due to WOW air’s closure. Stundin reported, however, that the airline’s ticket prices have risen rapidly: up to 200% on some routes in just a few days. Following WOW air’s announcement yesterday that the company was ceasing operations, the value of Icelandair stocks went up by 13%. At the same time that Icelandair shares were rising, the stocks of most other companies on the Iceland Stock Exchange were losing value.

Increased demand drives price hikes

Higher prices since WOW’s announcement are a consequence of increased demand, says Icelandair, which has caused customers to buy up the lowest fares. “The price of airline tickets is based on demand and in recent days and weeks, there has been a significant demand for our flights, and now as well due to the discounted rates we’re offering WOW passengers. In some cases, there are only first class seats available or else flights are fully booked.”

Icelandair released a discount price schedule for stranded WOW air passengers on Thursday afternoon. Per the announcement on their website, the discount fares are only available to travelers who have already embarked on their journey, and who have a return ticket with WOW air between March 28 and April 11. Fares are based on availability, but are currently listed as $60 to and from Europe; $100 to and from North America, and $160 on Europe-North America or North America-Europe flights (via Keflavík).

Prices could rise in future

Airline competition will not be enough to maintain low flight prices to and from Iceland, according to one specialist. Kristján Sigurjónsson, journalist and editor of Icelandic travel media outlet Túristi, told RÚV it is likely the cost of flights to and from the country will rise in the coming months. “Flight prices have been unusually low and we passengers have been flying at the cost of [airlines] in recent years and that is unlikely to continue,” Kristján stated, adding that while competition between airlines may temporarily keep prices low on certain routes, they will likely rise.

Icelandair Shareholders Yet to Approve WOW air Purchase

WOW - Icelandair - Keflavík Airport

The Iceland Stock Exchange (ICEX) suspended trading of Icelandair shares yesterday. Túristi.is reported first. According to ICEX, the suspension was made at the request of the Financial Supervisory Authority. Icelandair Group is now in negotiations with shareholders regarding changes to the trading terms of the company’s shares. The purchase agreement is subject to approval at a shareholders’ meeting to be held this week.

The trading suspension is temporary and will last until Friday, November 30, on which date Icelandair Group will hold a shareholders’ meeting. The company reached an agreement to purchase Iceland’s low-cost airline WOW air earlier this month. An announcement from Icelandair Group released on November 26, however, states it is unlikely that the conditions of the purchase agreement will be fulfilled by the November 30 meeting date.

Both Icelandair and WOW had been in the media spotlight for poor performance and financial difficulties over the past several quarters. The meeting agenda is also expected to include discussion of new measure’s to strengthen the company’s finances over the long term.

Icelandair’s subsidiary Loftleiðir Icelandic recently submitted a binding offer for 51% of the shares in Cabo Verde Airlines. On November 5, 2017, the Cape Verdean government signed an agreement with Loftleiðir turning the administration of the airline over to the Icelandic company.