News
10.09.08
XL Leisure Group’s refinancing not ensured
- Investors now in place to assume XL loan obligation if required-
As previously announced, Hf. Eimskipafelag Islands (“Eimskip”) (OMX: HFEIM) guaranteed a loan as part of its divestment of XL Leisure Group in 2006. According to information from XL, a process of refinancing is underway at that company. Without making any assumptions in relation to the process, the Board of Eimskip wishes to underline that, given the conditions in the European aviation market and information about the operation of XL, the likelihood that the loan guarantee will fall on Eimskip has increased.
Investors to join Eimskip
In the event that Eimskip is required to make payments under its XL loan guarantee, a group of significant investors led by Bjorgolfur Gudmundsson and Bjorgolfur Thor Bjorgolfsson will assume any potential obligation of Eimskip and delay its payment.Furthermore, it is expected that any such claim will subordinate to other claims on Eimskip. Through these actions, the impact of the loan guarantee would be limited on Eimskip’s operation. The total amount of the loan guarantee is EUR 207 million.
Gylfi Sigfússon, CEO of Eimskip:
“A successful refinancing of XL is an important goal in our aim of removing the potential impact of previously-made loan guarantees against Eimskip’s balance sheet and we hope, of course, that the XL refinancing will be completed successfully.However, at the same time we also want to point out that as with any such transaction there is no certainty and it may prove to be more difficult than expected. Even in such circumstances there is now a mechanism in place for significant, well-respected investors to then assume the loan obligation, which the Board of Eimskip believes is very positive.
As we have previuosly announced, Eimskip’s long-term goal is to bring our equity ratio to over 25%. To achieve this goal, we are working on several internal projects in order to lower Eimskip’s debt and strenghten its equity ratio.”
Eimskip - XL Leisure Group?s refinancing not ensured