Eignarhaldsfélagið Farice ehf. - Company Announcement

Financial restructuring of Eignarhaldsfélagið Farice

The revenues of Eignarhaldsfélagið Farice ehf. for the year 2009 have not met
the company‘s budget, in part due to the fact that data centres and other
industries using the company‘s undersea fibre optic cables to and from Iceland
have not started business. This has led to the company not having been able to
meet all of its debt payments. Therefore, Eignarhaldsfélagið Farice ehf. has
been working on financial restructuring of the company. In relation thereto,
the Company has entered into an agreement with its creditors representing
approx. 98.5% of the Company's own debt, excluding debt owed to the owners of
the class of bonds EFAR 09 01, which doesn‘t have any payment outstanding until
15 April 2010. 

The agreement with Eignarhaldsfélagið Farice ehf.‘s creditors entails that the
creditors have agreed that the company does not have to pay due payments for
the duration of the agreement, which terminates on 28 February 2010. This time
period will be used to prepare and submit to the parties of the agreement
suggestions on the company‘s financial restructuring. A similar agreement is
being negotiated with Eignarhaldsfélagið Farice ehf.‘s subsidiary, Farice hf.
Eignarhaldsfélagið Farice ehf. owns approx. 79,9% of Farice hf.‘s total issued
share capital. 

The total nominal value of the EFAR 09 01 class of bonds is ISK 5,000,000,000
and those bonds have  a simple guarantee from the Icelandic Treasury in
accordance with Act no. 121/1997, on state guarantees, as per regulation no.
237/1998, on state guarantees, the State Guarantee Fund and the Treasury
Re-lending. The total debt of Eignarhaldsfélagið Farice ehf. on consolidated
basis is approx. € 113.8 million, whereof approx. € 49.2 million are due.
Thereof the total debt of Farice hf. amounts to approx. € 25.8 million, whereof
due payments amount to approx. € 2.8 million. 

No material changes, other than those described herein, have occurred or
affected the future outlooks and the financial position of Eignarhaldsfélagið
Farice ehf. since 30 June 2009.

Attachments:

eignarhaldsfélagið farice ehf - interim financial statements - jan-jun 2009.pdf