Icelandair stock offering has begun
Íslandsbanki and Landsbankinn have contracted with Icelandair to invest up to six billion in the airline each if the stock offering does not reach its stated goal.
There is still uncertainty surrounding the participation of Iceland’s major pension funds in the stock offering. Financial expert Ásgeir Brynjar Torfason told RÚV’s Spegillinn programme that this stock offering is specifically about saving a company in operational difficulties and that different rules therefore apply to when the markets are normal. This stock offering could be quite a different proposition from the viewpoints of large investment institutions on the one hand, and less-risk-averse investors on the other. Icelandair has already secured significant state backing that could make it an attractive proposition for overseas hedge funds to prop up an ailing company with a State-backed safety net and then sell again once the coronavirus crisis passes, Ásgeir reasons.
Fréttablaðið’s Markaðurinn business supplement today reports that the boards of four large pension funds (Lífeyrissjóður verslunarmanna, LST, Gildi, and Birta) have called meetings today or early tomorrow to take final decisions on whether to invest. There is still a significant gap between employers on the board of Lífeyrissjóður verslunarmanna and representatives of its partner VR trade union.
It is believed that Par Capital, Icelandair’s biggest existing shareholder, will not take part in the stock offering this week. Asked if that sends a negative message to prospective Icelandic investors, Icelandair director Bogi Nils Bogason said it was a major honour securing Par as an investor last year to begin with and that the company is itself in a difficult position today, having invested heavily in aviation.