Independence Party uses Reykjavik HQ for loan collateral

Iceland’s opposition Independence Party reportedly mortgaged its headquarters last month for a ISK 125 million (USD 1.07 million) payout from Islandsbanki.

According to Frettatiminn, the loan is the second time the party has used Valholl (its headquarters) as collateral for a loan in less than a year. The political party apparently took a loan of ISK 40 million last July — also through Islandsbanki.

The party’s managing director, Jonmundur Gudmarsson, told the newspaper that the loans are part of a financial restructuring of the former government party whereby it is taking up new, stable loans in order to pay off older, unstable ones.

He added that it has been difficult to make ends meet recently because the party received ISK 158 million in direct state funding in 2009, but only ISK 74 million last year.

The giant ISK 60 million donations from FL Group and Landsbanki in 2006 have almost certainly run out now and similar corporate gifts are unlikely in the present economic climate — and also because the Independence Party is not currently in government.

Gudmarsson said that the financial restructuring is set to take six years and that two out of eight big debt payments have already been made.

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