Landsbanki loaned the limited company IG ehf. ISK 26 billion in the form of a so-called bullet loan shortly after Iceland’s banking crisis began in autumn 2008. The loan was used to purchase shares in Icelandic Group and secured on the shares themselves, as reported on the Kastljos current affairs television programme.
The programme revealed that the company ELL 187 was founded early in October 2008 by the Logos law firm. The initial capital in ELL 187 was a mere ISK 500,000, paid for by two fishing companies: Brim and HG (from the town of Isafjordur). ELL 187 was renamed IG ehf. at the beginning of November – the same initials at Icelandic Group. IG’s board of directors consisted of Gudmundur Kristjansson, CEO of Brim; Fridrik Johannsson, who was then and remains Chairman of the Board at Icelandic Group; and Einar Valur Kristjansson, CEO of HG. Kristjansson and Johannsson had both sat on the board at Icelandic before the banking crisis.
Kastljos reports that the annual accounts of IG illustrate that the tiny ‘just-on-paper’ company bought a 97.9 percent stake in Icelandic Group shortly after being set up and immediately following the banking crash. In the process, the capital stock of the former owners was devalued to compensate the company’s losses.
The newly-formed company took ISK 26 billion in loans from the already state owned Landsbanki to buy Icelandic Group and relieve it of much of its debt, which IG took on itself.
The loan is a three-year bullet loan and secured only on the Icelandic shares themselves. The two companies which own IG on paper have almost no exposure to the risk – all of which lies with Landsbanki.
“The Icelandic Group Plc. is a holding company controlling an international network of production and marketing companies selling seafood products on the international markets with emphasis on frozen fish,” says the Icelandic Group website.
Mysterious though the relationship between IG and Icelandic Group is; it is clear that the company was probably saved by Landsbanki’s intervention. The question Kastljos asks is whether the move was more concerned with the Icelandic economy and people, or purely for the benefit of friends and personal acquaintances within the companies involved.