The three municipalities – The City of Reykjavík and the Municipalities of Akranes and Borgarbyggð – which own Reykjavík Energy (Orkuveita Reykjavíkur; OR) and the ultimate owners of Ljósleiðarinn (Reykjavík Fibre Network; RFN) have approved to increase equity to be offered to new shareholders.
By virtue of this mandate, further preparations will now be made by Reykjavík Energy (Orkuveita Reykjavíkur; OR) and Reykjavík Fibre Network. Corporate Banking of Arion Bank has been hired as a consultant and to oversee the sale of new equity.
RFN’s Fibre Optic Network
The aim of the share capital increase is to strengthen RFN for the long term in the wholesale communications market and take advantage of the opportunities that the ongoing development of the Company’s new, more robust national backhaul fibres will bring about. RFN’s network is currently available to around 125,000 homes and businesses in the country. All major retail companies in the telecommunications market in Iceland utilize the network to some extent to provide their services to their customers. RFN’s national backhaul network is a national fibre ring that also extends to Iceland’s West Fjords. Telecommunications companies and others use that backhaul for data transfer within their respective systems, where data transfer within the mobile networks – between mobile masts and connection centres – is most extensive.
Municipalities' Resolutions
In a notification to the Stock Exchange on October 24th 2022, Reykjavík Fibre Network reported on the shareholders' meeting's approval of the company's board's proposal to increase the equity. The resolution was made subject to its confirmation by the City of Reykjavík and the Municipalities of Akranes and Borgarbyggð, which are the three municipalities that own Orkuveita Reykjavíkur. OR now holds all shares in Reykjavík Fibre Network. Borgarbyggð confirmed the decision of the shareholders' meeting November 2nd 2022, and following are the resolutions of the other two owners: (Translations made by RFN.)
The Municipality of Akranes April 25th 2023.
"The town council approves the share capital increase of Ljósleiðarinn ehf. and adopts the minutes of the town executive committee’s meeting [April 24th 2023]:
The municipal council of Akranes welcomes the forward-looking spirit expressed in the submitted resolution of the shareholders' meeting of Ljósleiðarinn ehf. October 24th 2022 regarding the increase of share capital to further strengthen the company's competitive position and thereby simultaneously strengthen Iceland's competitiveness, the country's electronic communications security and the communications security within Iceland.
The residents of Akranes were among the very first in Iceland to enjoy fibre optic connections to their homes and are therefore well aware of the increase in quality of life that robust and reliable telecommunications connections bring.
The municipality of Akranes extends thanks for the detailed analysis and data that have been submitted to support the decisions of the owners of Orkuveita Reykjavíkur in this important matter for Icelandic society.
The municipal council of Akranes, for its part, approves to increase the share capital of Ljósleiðarinn ehf. for up to ISK 3,250,000,000 in nominal value (three billion two hundred and fifty million kronur), i.e. 33.33% of the company's total share capital, or to the extent that Orkuveita Reykjavíkur’s share in the company will never be less than 66.67% of the total share capital of Ljósleiðarinn ehf. and that the authorization expires on December 31st 2024 to the extent that it is then still unused."
City of Reykjavík on May 2, 2023.
"It is proposed to approve the authorization to increase the share capital of Ljósleiðarinn ehf. about up to ISK 3,250,000,000,- in nominal value, (three billion two hundred and fifty million ISK), i.e. 33.33% of the company's total share capital, or to the extent that Orkuveita Reykjavíkur's share in the company will never be less than 66.67% of the total share capital of Ljósleiðarinn ehf. The amount is based on scenario A hybrid and takes into account a detailed risk assessment submitted to the city executive committee’s focus group. Furthermore, it is suggested that it be approved that the choice of methodology and arrangements for issuing new share capital be prepared under the responsibility of Orkuveita Reykjavíkur and its board, and that the plans be presented to the city’s executive committee. The Board of Directors of Ljósleiðarinn ehf. will be authorized to determine the tender rate and payment terms of the new shares and in which phases the authorization will be used. This approval is subject to the value of the new share capital in Ljósleiðarinn ehf. being utilized to pay off company debt . and strengthen the company's position in the competitive market. Furthermore, Ljósleiðarinn ehf. shall reassess and prioritize investment plans based on an analysis of their costs, benefits, and risks. It is also proposed to approve that this authorization for a share capital increase expires on December 31st 2024 to the extent that it is still unused at that time."
Arion Bank for advice and supervision
As stated above, a specific chain of responsibilities in the process ahead is assumed regarding the roles of the Boards of Reykjavík Energy and Reykjavík Fibre Network, respectively. The structure of the process is now being prepared in collaboration with Corporate Banking of Arion Bank's advisers, but the bank has been hired to advise and oversee the sales process.
Contact:
Breki Logason
Head of Communications
breki.logason@ljosleidarinn.is
