The Estonian government will now own 90% of shares in the national airline. (photo: Estonian Air)
TALLINN - Scandinavian airline giant SAS has agreed to sell off the vast majority of it's shares in Estonian Air as the group looks to "focus on the Nordic home markets."
SAS will reduce its stake in Estonian Air from 49 percent to 10 percent as part of an agreement with the Estonian government. Government officials said it saw the buyout as an injection of funds into the struggling national airline.
"The state is not buying Estonian Air from SAS, rather than is injecting additional funds in the company's equity," Economy Minister Juhan Partstold journalists.
The purchase reportedly cost the government some 400 million kroons. In addition to investing 280 million kroons in the company's share capital, the state is obliged to repay SAS its 115 million kroon loan over four years.
According to the deal Estonia has an option to buy out SAS's remaining stake and SAS has the option to sell its stake "at fair market value" after four years.
SAS acquired its stake in the airline in 2003. It also at one time held a significant stake in Riga-based airBaltic, which it divested in early 2009.
Before the new arrangement, SAS owned 49% of Estonian Air, Estonian state had 34% and investment bank Cresco owned 17%.