Finnair has unveiled its plans to convene an Extraordinary General Meeting (EGM) with the purpose of seeking authorisation from its shareholders for a significant share issuance (the offering). This capital raising initiative aims to generate gross proceeds of up to €600 million and will include pre-emptive subscription rights for the company’s existing shareholders.
The successful execution of the offering is contingent upon the approval of the company’s shareholders at the EGM scheduled for October 27, 2023. Completion of the Offering is anticipated in the fourth quarter of 2023, subject to prevailing market conditions.
The proceeds derived from the offering will play a crucial role in fortifying Finnair’s financial position and bolstering its balance sheet. This strategic move is in line with the company’s overarching objectives, including the effective management of outstanding financial obligations, the pursuit of sustainable and profitable growth and the capacity to undertake future investments. The offering has been strategically designed to enable Finnair to achieve key financial milestones, such as attaining a comparable operating profit margin of six percent by the close of 2025, maintaining a net-debt-to-comparable-EBITDA ratio of 1-2x by the close of 2025 and facilitating shareholder distributions from 2025 onward (based on 2024 earnings). Additionally, the net proceeds from the offering will be directed towards settling the portion of the €400 million capital loan that remains unpaid following the Offering, along with accrued interest. Furthermore, the redemption of the company’s capital securities totalling €200 million (hybrid bond) on September 1, 2023, is expected to contribute to a sustainable balance sheet while substantially reducing the company’s financing costs.
Importantly, Finnair’s primary shareholders are fully supportive of the offering. The State of Finland, representing approximately 55.8% of the company’s shares (including treasury shares), has indicated its backing for the proposal to the EGM and intends to exercise its pro rata share of new shares through allocated subscription rights. The State of Finland intends to offset the subscription price of the shares against an equivalent amount of the principal of the capital loan. Additionally, other major shareholders, including Varma Mutual Pension Insurance Company, Elo Mutual Pension Insurance Company and Ilmarinen Mutual Pension Insurance Company (collectively representing approximately 3.4% of the company’s shares, including treasury shares), have made irrevocable commitments to support the proposal at the EGM and to subscribe for their respective pro rata shares of the Offering, subject to customary conditions.
The remaining portion of the offering, approximately 40.7%, is fully underwritten on a standby basis, subject to customary terms and conditions. Deutsche Bank Aktiengesellschaft and Nordea Bank Abp have been appointed as the joint global coordinators, lead managers and underwriters of the offering. (£1.00 = €1.16 at time of publication).