“Since 2003, SAS has held a 49 percent interest in the airline. According to the Core SAS strategy with focus on the Nordic home market, this stake has been set out for divestment,” said Sture Stølen, vice president and head of SAS Group investor relations, in a statement.

The agreement with the Estonian government involves SAS divesting its stake. The Estonian government will provide about 205 million kronor ($25.89 million) of new capital in a new rights issue. In return, SAS will convert about 20 million kronor it currently holds in loans into equity.

After the rights issue, the Estonian government will hold 90 percent of Estonian Air, with SAS holding the balance. SAS will also remain the lender of about 70 million kronor in loans with a maturity in 2014.

The transaction is neutral to the profit and liquidity of the SAS Group. Estonian Air has an option to buy out SAS’ remaining stake and SAS has the option to sell its stake at fair market value in four years.

SAS will continue its commercial cooperation with Estonian Air, Estonia’s national carrier. The airline was founded in 1991 and is also partially owned by investment bank Cresco.