Investors brace for significant financial setbacks due to buyout attempt by PLAY's founding members

Investors brace for significant financial setbacks due to buyout attempt by PLAY's founding members

Hey there! Let's talk about some big news shaking up the Icelandic airline industry. PLAY, a popular low-cost carrier, is about to undergo a major change due to a takeover bid launched by two of its key shareholders – CEO Einar Örn Ólafsson and Deputy Chairman Elías Skúli Skúlason. These gentlemen are planning to secure all outstanding shares for a price of just 1 ISK per share. A pretty penny saver, huh?

This move could give PLAY a market value of roughly ISK 1.89 billion based on its current share count. But hey, who wants cash when you can get a piece of the action with BBL 212 hf instead? That's the new holding entity these shareholders are setting up, and they're sweetening the deal by offering shareholders the option to choose between hard-earned dough or shares in BBL 212 hf.

They've already announced their intentions, but it's not all set in stone yet. The offer won't be formally submitted until they secure the full USD 20 million needed to fund the transaction. With about USD 7 million already pledged, they're looking to swing another USD 13 million to seal the deal.

Now, let's chat about what this takeover could mean for PLAY’s future. For starters, it’s saying goodbye to those busy U.S. routes by October 2025. Instead, they'll be focused on sunny escapes and aircraft leasing. Four planes will continue to bustle about Iceland, while six others will be leased to other airlines.

The company is working on a Maltese air operator's certificate, so they'll be operating under foreign skies, so to speak. Since PLAY's stock has plummeted an astonishing 97% since its listing in 2021, many investors will probably be feeling quite the pinch when they realize their losses. One of the largest shareholders, Birta Pension Fund, holds a 10.35% stake, and the offer price represents a 24% premium over yesterday's closing price.

Here's a quick recall of the key details:

1. Takeover Offer: A chance to swap cash for shares in BBL 212 hf.
2. Funding: USD 7M already pledged, with a target of USD 20M more to come.
3. Shareholder Approval: The goal is to get approval from 90% of shareholders.
4. Strategic Changes: U.S. routes are out, sun/leisure destinations and Malta-based leasing are in.
5. AOC: Operating under a Maltese air operator’s certificate.
6. International Plans: Discussions with Kosovo for a virtual airline are advanced.

So, there you have it – a fresh lick of paint for PLAY! Their aim? To steer the airline towards profitable and operationally sustainable markets. Let's keep our eyes on the skies to see how this all unfolds!

1. The takeover bid by Einar Örn Ólafsson and Elías Skúli Skúlason for PLAY could potentially be a lucrative investment opportunity for shareholders, as they are offering the option to trade cash for shares in the new holding entity, BBL 212 hf.
2. Currently, there's a funding gap of USD 13 million needed to complete the takeover, but with USD 7 million already pledged, the shareholders aim to secure the remaining funds to proceed with the transaction.
3. Shareholders who opt for shares in BBL 212 hf may find their investments saw a 24% premium over the closing price from the previous day, given the offer price of just 1 ISK per share of PLAY.

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