Finnair (AY, Helsinki Vantaa) has released details of its fully underwritten EUR500 million euro (USD569 million) rights offering, a sum that is almost as much as its current market value.
The 55.9% state-owned flag carrier said in a statement on June 10 that shareholders will receive one subscription right for each share held on June 12, and each right will entitle them to subscribe to 10 offer shares for EUR0.40 (USD0.45) per share.
As a result of the offering, the total number of the shares in the company may increase from 128,136,115 shares to a maximum of 1,407,401,265.
Shareholders who decide not to take part in the offering are likely to see a significant dilution, analysts told Reuters.
Finnair said in the statement that it “plans to use the proceeds from the offering to strengthen its equity and liquidity position in the exceptional situation caused by the Covid-19 pandemic as well as to support the execution of Finnair’s strategy. [...] To achieve the goals of the company despite the exceptional circumstances, Finnair considers it prudent to seek to strengthen its balance sheet.”
The state of Finland has committed to subscribing in full to the issue, and the banks managing the offering - Citigroup Global Markets Limited and Nordea Bank - have committed to subscribing to any rights left by shareholders.
Also on June 10, the European Commission cleared Finland’s plans to contribute to Finnair's recapitalisation by subscribing to new shares in the rights issue.
“Finnair ensures the essential domestic and international connectivity needs of Finland. Given the geographical location of the country, the national economy, many jobs, and the development of foreign trade rely on these services,” European Competition Commissioner Margrethe Vestager explained.
“The EUR286 million [USD326 million] public contribution to Finnair's recapitalisation will help the company in an industry that has been particularly hard hit by the coronavirus crisis. The substantial participation of market investors in the transaction is a positive signal that the commission strongly encourages, as it limits the distortion of competition while contributing to the recovery,” she added.
Finnair said on April 29 that it anticipated a daily loss of around EUR2 million (USD2.28 million) per day throughout the second quarter, despite cost adjustments. In May, it received state and bank guarantees for a EUR600 million (USD683 million) loan and said additional funding may include drawing on available credit lines and the leaseback of aircraft.
