Landsvirkjun recently signed two agreements regarding restructuring of two outstanding bonds. One of the bonds was converted from euros to US Dollars and for the other bond a put option was removed and the final maturity date was amended.
An agreement was reached to convert a bond in euros to US Dollar. The bond was issued in 2006, with a maturity date in 2016. The bond amounted to 50 million euros but after the redenomination it amounted to approx. 68 million US Dollars.
In the other agreement a put option was removed. The bond amount is 50 million euros with a yearly put option until 2023. The Noteholder accepted to remove the put option and amend the final maturity date to March 2020. As a result of the put option the Company defined the bond as a short term liability but after the amendment it will be defined as a long term liability.
Landsvirkjun´s benefit from these restructurings is twofold. On one hand, financial risk of the Company is reduced due to possible movements in the euro against the US Dollar, which is the functional currency of the Company. On the other hand, refinancing risk is reduced by setting a definitive maturity date in 2020. These amendments are an important factor in the Company’s policy to reduce risk related to the loan portfolio.