Eignarhaldsfélagið Farice ehf. - Company Announcement

Financial restructuring - Merger

For the past few months Eignarhaldsfélagið Farice ehf. and its subsidiary,
Farice hf., in cooperation with their largest creditors and shareholders, have
been working on a financial restructuring of the companies. Discussions have
been progressing and the parties are optimistic that a satisfactory conclusion
will have been reached in the coming fall. As part of the restructuring the
board of directors of the companies have agreed on a merger schedule for the
companies, whereby Eignarhaldsfélagið Farice ehf. will be the surviving entity.
The effective date of the merger will be 1 January 2010. With this in mind, the
agreement which has been in place between the companies and their creditors has
been extended until the end of next August.