Prospectus November 2006
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PROSPECTUS NOVEMBER 2006 ICELANDAIR GROUP HOLDING HF. OFFERING OF 185,000,000 SHARES BY GLITNIR BANKI HF. SUBSCRIPTION PERIOD 27 NOVEMBER – 4 DECEMBER SHARE PRICE ISK 27.0 This page is intentionally left blank TABLE OF CONTENTS I. Summary II. Securities Note III. Registration Document This Prospectus is published on 27 November 2006. The Prospectus has been scrutinised and approved by the Iceland Stock Exchange (ICEX) on behalf of the Financial Service Authority in Iceland. It was prepared for the expected listing of Icelandair Group Holding hf. on the ICEX Main List and a share offering by Glitnir Banki hf. of 185,000,000 shares prior to the listing. This Prospectus, published in English only, consists of three documents: Summary, Securities Note and Registration Document. For the timeframe of 12 months from the date of the Prospectus (lifetime of the document), the Prospectus is available on the website www.icelandairgroup.is and Icelandair Group Holding hf’s registered office Reykjavik Airport, 101 Reykjavik, Iceland. I. SUMMARY This summary should be read as an introduction to the Prospectus dated 26 November 2006 containing this Summary, a Securities Note and a Registration Document. Prospective investors should read the Prospectus in its entirety. Because this is a summary, it does not contain all the information that may be important to you. You should read this summary in conjunction with the more detailed information in the rest of the Prospectus, including the “Risk Factors” sections and the financial statements and the notes thereto. Any decision to invest in the Shares should be based on consideration of the Prospectus as a whole. Following the implementation of the relevant provisions of the Prospectus Directive in each member state of the European Economic Area, no civil liability will attach to us or our board of directors in any such member state in respect of this summary, including any translation hereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus. Where a claim relating to the information contained in the Prospectus is brought before a court in a member state of the European Economic Area, the plaintiff investor may, under the national legislation of the member state where the claim is brought, be required to bear the costs of translating the Prospectus before the legal proceedings are initiated. LISTING ON ICEX MAIN LIST This Summary concerns the expected listing of all general public of up to 40 million shares and offer to 1,000,000,000 issued shares in Icelandair Group qualified investors of minimum 110 million shares. Holding hf. on the Iceland Stock Exchange (ICEX) Main List and a share offering of 185 million shares. Icelandair Group Holding The ISIN number of the shares is IS0000013464. Icelandair Group Holding hf., Icelandic ID No. The listing on the ICEX Main List is conditional upon 591006-2150, Reykjavík Airport, 101 Reykjavík, the Company fulfilling ICEX conditions regarding Iceland, telephone number +354 505 0300. number of general shareholders and diversification of ownership. The share offering is to be conducted Glitnir Banki hf. (Manager and Offeror) through three separate tranches prior to the expected Glitnir banki hf., Icelandic ID No. 550500-3530, listing, offer to Icelandair Group Holding’s Kirkjusandi 2, 155 Reykjavík, telephone number: employees of up to 35 million shares, offer to the +354 440 4000. SHARE OFFERING The objectives of the proposed listing are to increase Undertakings to subscribe shall be made after the liquidity of the shares, reach a broader range of opening of the subscription period at 10:00 GMT on investors and to get better price information on the November 27, 2006 and no later than 19:00 GMT on shares. In the share offering a total of 185 million 4 December 2006. An agreement on subscription will shares will be offered, all at the price of ISK 27.0 take effect when the Offeror accepts a prospective per share. All proceeds will be received by Glitnir investor's undertaking to subscribe. The Offeror will banki hf. as the Offeror. The Share Offer is a step do so no later than 20:00 GMT on 5 December 2006. towards fulfilling ICEX conditions for listing The outcome of the offering will be published on the regarding the number of general investors and the ICEX news webpage before 10:00 GMT on 6 diversification of ownership. December 2006. The shares will be delivered to the investor’s account no later than 13 December 2006. If the Company will fulfil the ICEX conditions then 14 - 2 – December 2006 will be the earliest date on which the of reserved shares, outstanding shares will be offered shares will be admitted to trading on ICEX. to qualified investors. Offer to the general public The shares are only offered in Iceland. A total of 40 million shares will be offered to the Subscriptions constitute a legally binding agreement general public. Participation in the offering is pursuant to which those subscribing are bound to available to all individuals holding an Icelandic ID- purchase the shares subscribed for and/or allocated Number, if not prohibited by law. The Offeror’s to. When subscribing the investor declares that he employees are allowed to take part in the offer has familiarised himself with, understood and agreed to the general public. In the event of demand the terms and other aspects of the Prospectus dated being less than the offered amount, outstanding 26 November 2006. shares will be offered via the offer to qualified investors. Offer to Icelandair Group Holding’s employees All Icelandair Group Holding’s employees at 15 Offer to qualified investors November 2006 are entitled to the subscription of a A minimum of 110 million shares will be offered to fixed number of shares without being subject to qualified investors. Only qualified investors as reduction. Taking into account the number of defined in Point 7 of the first paragraph of Article 2 employees and the number of shares reserved for of Act No. 33/2003 on Securities Transactions may each, the maximum number of shares allocated on take part in this part of the Offering. these grounds could amount to 35 million shares. Should demand for shares be less than the number RISK FACTORS An investment in the shares of Icelandair Group the Issuer’s competitive position. The structure of involves risks, both general risks relating to investments shareholder ownership and the possibility of dilution of in securities and risks relating to the operations of the shares by new share issue can also be risk factor for Issuer. The risk should be assessed by potential investors. investors before making an investment in the shares and investors are advised to study the discussion of risk Among the important risks to which Icelandair Group is in the Securities Note and the Registration Document directly exposed are risk factors relating to the Company thoroughly. as an airline operator, such as fuel price and availability, seasonality, airport access and security, Examples of risk factors that may have a material effect increased competition and changes in regulations and on the price of the Issuer’s shares, and thereby on the applicable law. Strikes and the risk of key employees investment value, are market risk, liquidity risk and resigning could potentially have material effects on the counterparty risk. The share price can fluctuate Issuer. Tax issues, litigations, exchange rate and considerably due to factors such as variations in interest rate fluctuations and the coverage of insurance operating income or cost, changes in the market agreements are also potential risk factors worth environment, adverse commentary about the Issuer and consideration. its operations and services in the media and changes to - 3 – MARKET MAKING According to two separate agreements, Glitnir banki hf. and Straumur Burðarás Investment Bank hf. will act as Straumur Burðarás Investment Bank hf. shall through market makers for Icelandair Group Holding hf.'s shares its own account submit daily bids and asks to the ICEX after the expected listing on ICEX Main List. for a minimum of ISK 13.5 million (purchasing price) each side at a price determined by the market maker Glitnir banki hf. shall through its own account submit on any given occasion. The maximum bid/ask spread daily bids and asks to the ICEX for a minimum of ISK may not exceed 1.0% and the difference from the last 15 million (purchasing price) on each side at a price price paid may not exceed 3.0%. Straumur Burðarás determined by the market maker on any given occasion. Investment Bank hf. is obliged to provide liquidity for The maximum bid/ask spread may not exceed 1.0% up to ISK 150 million per day. and the difference from the last price paid may not exceed 3.0%. The market maker is obliged to provide liquidity for up to ISK 150 million per day. COST OF THE SHARE OFFER The total cost of the admission to trading of the directly relating to the Share Offer will be covered by share capital on the Main List of the ICEX is the Manager. estimated at ISK 200 million including charges from ICEX, advisory fee to the Manager. All these costs will fall on Icelandair Group Holding hf. All costs - 4 – INFORMATION ON ICELANDAIR GROUP HOLDING History and development directors to merge Icelandair Group Holding with The history of Icelandair Group Holding's Icelandair Group hf. The merger will be effective as predecessors dates back to 1937, almost as long as of 1 November 2006. However, a formal decision on the history of commercial aviation in Iceland, which the merger will be made by shareholders on a began in 1919, less than 16 years after the Wright sharholders’ meeting after the expected date of brothers made the first ever powered flight.