The biggest shareholders of PLAY (Iceland) (OG, Reykjavik Keflavik) have agreed to subscribe to nearly 575 million new shares for a total subscription value of ISK2.59 billion Icelandic krónur (USD18.8 million), contingent on other investors providing at least an additional ISK1.41 billion (USD10.2 million).
"In the coming weeks, the company plans to continue talks with investors from its current shareholder base and start talks with other investors with the goal of raising further commitments of participation in the capital increase," the Icelandic low-cost carrier announced in an investor memorandum.
The subscriptions are contingent on the approval of the carrier's shareholders to increase the capital. The airline will seek approval at an annual general meeting scheduled for March 21, 2024. Another condition is that the total capital provided must amount to at least ISK4 billion (USD29 million), including the amount pledged by the largest shareholders.
While PLAY did not disclose the identity of the shareholders who tentatively subscribed to the new shares, the initial offer was made exclusively to shareholders who own securities worth at least EUR100,000 euros (USD108,000). The carrier has a diversified shareholder base and is mostly owned by various funds and financial institutions in Iceland. The largest individual shareholder, the Leika fjárfestingar fund, has a 10.8% stake in the airline.
PLAY intends to outline the specific terms of the full capital increase programme, as well as its plan to uplist to the Nasdaq Main Market in Iceland, by the end of February 2024.
In an investor Q&A, the carrier said that it was not against financing its operations through borrowing, but capital is, for now, the preferred pathway.
"PLAY has no objection to acquiring funds through various means, such as mezzanine financing. So far, the company's board of directors has preferred to finance the company with capital rather than borrowing," it elaborated.
The airline recently announced a plan to pause its fleet growth to shore up liquidity in light of growing cost pressures. Nonetheless, it reassured investors that "the company's current cash position is according to plan and is not considered to threaten the airline's business viability".
