Landsnet hf. - Company Announcement

Landsnet successfully completes international bond issue for 200 million USD

Landsnet has issued an unsecured bond (the “Notes”) in the amount of 200
million USD (22.9 billion ISK). The Notes were sold to international
institutional investors via a private placement and will not be listed on the
stock exchange (NASDAQ OMX Iceland). The Notes vary in maturity from five to
twelve years and will carry a fixed interest rate of 4.56% (weighted average).
The financing is part of an initiative to optimise the Company’s long-term
capital base on currently favourable terms, to change the composition of loans
and reduce currency risk. 

Landsnet’s CEO, Guðmundur Ingi Ásmundsson stated that the move is a big step
for Landsnet as it marks the first time that Landsnet has issued a bond to
foreign investors. He also expressed his appreciation for the confidence
investors have shown Landsnet. 

"This allows us to secure currently favourable terms in the market as well as
reduce currency risk as Landsnet changed its reporting currency to the US
dollar at the beginning of the year. We are the first Icelandic energy company
to choose this route and we are both pleased by the favourable terms offered to
us and the positive reception we have received. This is a tremendous
achievement and good publicity for the Company and Iceland.” 

Offers were received for over 260 million dollars and a decision was made to
double the issue due to strong investor interest and favourable current market
conditions. The financing will be carried out in two stages as half of the
amount will be drawn now and the balance in March. 

 Barclays Capital Inc managed the bond issue.

For more information, please contact Guðlaug Sigurðardóttir, Landsnet’s CFO:
gudlaugs@landsnet.is . Tel: 354- 563 9300.