Correction: In the fourth line of the fifth paragraph 8.1 million was
miswritten and has been changed to 8.1 billions, and in the attachment
accordingly.
Icelandair Group hf. and its largest lenders, Íslandsbanki and Glitnir Bank
hf., have reached an agreement on how it is foreseen to finalize the financial
restructuring of Icelandair Group. Among other things, the restructuring will
call for the involvement of other creditors in addition to lessors of aircraft
used by Icelandair Group subsidiaries in their operations. Approval from a
shareholders' meeting of the Group will be needed for certain aspects of the
restructuring, in addition to the final approval of creditors. None of the
Group's debts will be written off.
The day-to-day operation of the Group has been successful in recent months, but
high financial expenses and large short-term debts have had a negative impact
on the Group's position. Icelandair Group's management has been working closely
with lenders in recent months on the financial restructuring of the Company
with a view to strengthening its foundations. Icelandair Group has also been
advised by a foreign bank having special expertise in the field of air carrier
operations.
If the restructuring goes through as planned, the understanding is that
domestic creditors will convert loans in the amount of approximately ISK 4.8
billion into shares. In addition, debts in the amount of ISK 7.7 billion,
together with assets in a corresponding amount, will be transferred to a
separate holding company to be owned by Icelandic creditors. Remaining in
Icelandair Group will be assets pertaining to what the board of directors has
defined as core operations. These are Icelandair, Air Iceland, Iceland Travel
(Vita), Icelandair Cargo, Icelandair Hotels, Icelandair Ground Services,
Loftleidir-Icelandic and Fjárvakur, in addition to the Latvian air charter
company SmartLynx, which is scheduled for divestment from the Group this year.
Finally, there are plans to invite investors and the public to come with new
share capital into the Company in share offerings to be held later this year,
which will be launched in two stages. The first stage will take the form of a
restricted tender procedure to a limited group of professional investors. This
would be followed by a public offering to achieve the aim of Icelandair Group,
Íslandsbanki and Glitnir of securing involvement in the Company by a broad
group of investors, both professional and private. Icelandair Group has
entrusted the supervision of both offers to Íslandsbanki's Corporate and
Investment Banking.
According to a preliminary income statement, the total turnover of the Company
in 2009 amounted to ISK 80.3 billion from current operations. Of this figure,
core operations accounted for ISK 75.2 billion. Earnings before financial
items, taxes and depreciation (EBITDA) amounted to ISK 8.1, billion, of which
core operations accounted for ISK 7.3 billion. With the impact of the financial
restructuring of the Company, the projected turnover for 2010 will amount to
ISK 78.2 billion from core operations and EBITDA is projected at ISK 7.6
billion.
Enclosed as attachment is a draft of the Icelandair Group Balance Sheet as at
31 December 2009 (left column) with an illustration of the impact of the
proposed financial restructuring on the Balance Sheet (right column), excluding
the effects of the proposed share offerings.
Björgólfur Jóhannsson, President and CEO:
“The financial restructuring of Icelandair Group will strengthen the Company's
liquidity and equity position significantly and leave the Group better placed
to deal with seasonal fluctuations in its business operations and reinforce
organic growth. By selling off the assets which do not pertain to core
operations, the Company has simplified its business model, and the restructured
Balance Sheet places the Company in a position to return favourable operating
results and meet its obligations. Icelandair Group is in the process of
withdrawing from its role as an investment company to become an operating
company specialising in universal tourist and air travel services."
Owing to the restructuring process, Icelandair has decided to postpone the
publication of its annual financial report until Week 15, and the Company's
Annual General Meeting has been scheduled for May.
For further information, please contact:
Björgólfur Jóhannsson,President and CEO, tel.+354- 896 -1455
Bogi Nils Bogason, CEO, tel.+354-665-8801
