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2009-04-06 13:05:58 CEST 2009-04-06 13:06:58 CEST REGULATED INFORMATION Sparisjóður Mýrasýslu - Company Announcement- SPM reaches deal with largest creditors and sells all its assets to New Kaupthing BankOn 27 March 2009 the largest creditors of Sparisjódur Mýrasýslu ("SPM") agreed to a proposal on the financial restructuring of the bank. On the basis of this agreement SPM has sold all its assets to New Kaupthing Bank hf. (New Kaupthing). New Kaupthing will pay for the assets with bonds and shares issued by New Kaupthing. In order to guarantee the continued smooth operation of SPM it is vital that the rights and obligations contained in the purchase agreement between SPM and New Kaupthing are delivered in a single action. In accordance with a request from the board of directors of SPM, the Icelandic Financial Supervisory Authority has agreed to exercise the authorisation contained in Article 100 a., paragraph 3 of Act no. 161/2002 on Financial Undertakings, cf. Article 5 of Act no. 125/2008, to assume the authority of a meeting of guarantee capital owners of SPM and decide to transfer in a single action from SPM to New Kaupthing the rights and assets specified in the purchase agreement. This has been done because the transfer of deposits and loans, security rights and other rights and assets which must be transferred, without there being a simple merger, is not under the control of the board of directors of SPM. With this sale, all assets and deposits of SPM are transferred to New Kaupthing which takes over the operations of SPM in Borgarnes. The branches of New Kaupthing and SPM in Borgarnes are scheduled to be merged in the next few weeks. At the same time New Kaupthing will acquire all guarantee capital in SPM. New Kaupthing will also acquire SPM's subsidiaries, including Sparisjóður Ólafsfjarðar and Afl Sparisjóður in Siglufjörður and Sauðárkrókur. These subsidiaries will continue to operate as before. This ensures that there will be no disruption whatsoever in services to customers of SPM and related savings banks and they will be able to obtain all services as before. It also ensures there will be a minimum impact on employees. SPM has experienced severe financial difficulties since the beginning of 2008, with the bank estimated to have made a loss of ISK 21 billion during the last operating year according to pro forma financial statements. However, this brings a successful conclusion to the issue for creditors and stakeholders. Proposal on financial restructuring As stated above, the largest creditors of SPM agreed to a proposal on the financial restructuring of the bank on 27 March. It was proposed that general and subordinate claims against SPM be settled as follows: • 43.7% of general claims be paid for by increasing guarantee capital in SPM so that each krona of general claims is equal to one krona of guarantee capital; • 3.1% of general claims be paid for in cash; • 53.2% of general claims be paid for in bonds (one or more). The bond will be a 9-year instrument, without instalments the first two years; and • Subordinate loans would be paid in full (100%) by increasing guarantee capital in SPM on a 1:1 basis. It was assumed that if SPM's proposal were accepted, then SPM would be converted into a limited liability company and then merged with New Kaupthing. The board of directors of SPM intends to apply for permission to seek composition in accordance with the provisions of Act no. 21/1991 on Bankruptcy etc. This is likely to be preceded by a moratorium on payments, while a draft composition agreement and the necessary supporting documentation are prepared. Draft financial results for 2008 According to the draft financial results for 2008, SPM (parent company) reported a loss of ISK 21,147 million after tax. This loss is explained by the decrease in the price of shares owned by SPM and increased provisions for losses, which were considered necessary in light of the fact that the financial situation of companies and individual customers of SPM had deteriorated sharply owing to the depreciation of the Icelandic krona, high interests rates and the slowdown in the Icelandic economy. Total assets amounted to ISK 36,466 million of which ISK 25,295 million were loans to customers. Total liabilities of SPM amounted to ISK 51,621 million. Equity according to the balance sheet was negative by ISK 15,155 billion, compared to a positive figure of ISK 6,299 billion at the end of 2007. The table below shows the key figures from the draft financial results for 2008. See attachment. |
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