• Detailed due diligence completed
  • Subject to approval by the Icelandic Competition Authority
  • Plans to divest a substantial holding in Icelandic Group
  • Húsasmiðjan to be sold through an open sale process

The Enterprise Investment Fund (FSÍ), that belongs to a group of Icelandic Pension Funds, has finalised its purchase of Vestia holding company from Landsbankinn (NBI hf.), subject to the approval of the Icelandic Competition Authority. The intended acquisition was announced on the 20th of August, subject to the outcome of the now completed due diligence process.

The price paid by FSÍ for Vestia decreases from ISK 19.5 billion to ISK 15.5 billion. The reasons for this are twofold. On the one hand, the valuation of assets has been lowered due to altered presumptions and, on the other hand, it has been agreed that certain assets shall be excluded from the transaction. The main difference from the previous agreement is that Landsbankinn retains a 19% holding in Icelandic Group instead of fully divesting the company. FSÍ holds a 12 month call option on the 19% share.

Under the final contract, Landsbankinn’s share capital promise to FSÍ decreases from ISK 18 billion to ISK 15 billion. If FSÍ’s assets reach ISK 60 billion, Landsbankinn’s holding will be 25%. The unpaid share capital promise to FSÍ will be realised in proportion with investments undertaken and paid back out to shareholders upon sale of the asset in question.

The companies sold to FSÍ along with Vestia are: Icelandic Group, Teymi, Húsasmiðjan and Plastprent.

FSÍ will follow its Shareholders’ Policy in all dealings with these companies, including provisions on clear and independent operational targets. Profitability will guide the operations of the companies. The management of these companies will be required to comply with FSÍ’s Shareholders’ Policy. To increase transparency in the operations of companies owned by FSÍ, future annual and 6M financial statements will be made public. It is the general policy of FSÍ to divest assets within 4-7 years, though shorter periods may apply in some cases.

Icelandic Group
As was stated in an announcement issued by Vestia on the 21st of September, FSÍ plans to sell at least 30% of its holding in Icelandic following the purchase of Vestia. Should the sale be concluded, FSÍ will utilise its call option for the 19% share remaining in the ownership of Landsbankinn. The aim is to sell a substantial share in Icelandic in the next months and already numerous parties have expressed interest in acquiring shares in the company. Icelandic’s estimated turnover this year is ISK 150 billion and EBITDA is estimated around ISK 7.5 billion. Icelandic has approximately 3,700 employees, about 50 of which are stationed in Iceland. The book value of Icelandic’s equity as of 30 June 2010 was ISK 25 billion and its equity ratio was 34%.

The Teymi group operates four companies in Iceland, three in the Nordic countries and one in the USA. It has been decided to split Teymi into two separate public limited companies; telecommunications company Vodofone and its subsidiary in the Faroe Islands on the one hand and IT company Skýrr ehf. and its subsidiaries Hugur-Ax in Iceland, Hands in Norway and Kerfi in Sweden on the other. EJS, also owned by Teymi, was previously merged with Skýrr. Total estimated turnover of the companies this year is ISK 40 billion and they employ approximately 1,350 people. The book value of Teymi’s equity as of 30 June 2010 was ISK 7 billion and its equity ratio was 27%.

FSÍ aims to sell Húsasmiðjan through an open sale process at the earliest feasible opportunity. Details will be announced at a later date. It has been agreed that Húsasmiðjan’s real estate in Grafarholt shall be excluded from FSÍ’s purchase. Total estimated turnover of Húsasmiðjan this year is ISK 12.5 billion and the company employs over 500 people. The book value of Húsasmiðjan’s equity at year-end 2010 is estimated at ISK 1.3 billion and its equity ratio at 30%.

The purchase of Plastprent includes the company’s domestic operations and its Scotland-based subsidiary. Excluded from the purchase of Vestia by FSÍ are Plastprent’s subsidiaries in the Baltic countries. Plastprent’s total estimated turnover this year, excluding the Baltic operations, is ISK 1.6 billion and the company employs approximately 100 people. The book value of Plastprent’s equity at year-end 2010 is estimated at ISK 200 million and its equity ratio at 27%.

Human resources
An agreement has been reached that two of Vestia’s eight employees shall take up positions with FSÍ. Other employees have decided to devote their energies to other tasks. Currently, FSÍ has five employees; that number rises to seven following this transaction.

Finnbogi Jónsson, Managing Director of FSÍ:
“This transaction is an important milestone for FSÍ; furthermore, it is important that uncertainty regarding the ownership of these companies has now been resolved. The outcome of due diligence has strengthened our belief in the future possibilities of these companies. FSÍ will work closely with their management and staff to achieve our common goals – to establish their profitability and solidify their operating basis for the future. Through the purchase of Vestia, and previously of Icelandair, FSÍ has acquired holdings in powerful companies with a broad operating basis and over 8,000 employees.”

Further details are available from Finnbogi Jónsson, Managing Director of FSÍ, tel. +354 471 7080 or +354 897 5767.