Icelandair Group restructuring in final stages
25-Mar-2010 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, million, 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.