Eignarhaldsfélagið Farice ehf. - Company Announcement

Financial restructuring nearing an end - equity increased by EUR 63.7 million

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. An agreement has been reached regarding the
guidelines for such a restructuring and the aim is to finalize it no later than
16 December 2010. 

On 10 December 2010 Eignarhaldsfélagið Farice ehf. and Farice hf. both held
shareholders' meetings. On Farice hf.'s shareholders' meeting a merger with its
parent company, Eignarhaldsfélagið Farice ehf., was agreed. On
Eignarhaldsfélagið Farice ehf.'s shareholders' meeting the merger was also
agreed with subsequent increase of share capital after the company's share
capital had been reduced to adjust for accumulated losses. Furthermore, the
name of the merged company was changed to Farice ehf., as well as the object of
the company was sharpened. 

The largest shareholders in Farice ehf., the Icelandic state and Landsvirkjun
(The National Power Co.), will provide the company with new share capital in
Class A in the amount of EUR 11 million. Also, the company's largest unsecured
creditors have agreed as part of the financial restructuring of the company, to
convert those debts amounting to a total of EUR 52.7 million to share capital
in Class B, which i.a. grants them priorities to payments from the company
ahead of shareholders in Class A. The equity of the merged company will
therefore be raised by a total of EUR 63.7 million and will post restructuring
amount to a total of EUR 75.5 million. 

Secured creditors of Farice ehf., excluding EFAR 09 01 class of bonds which
remains unchanged, have agreed to refinance the company's debt. The total debt
including EFAR 09 01 class of bonds amounts to approx. EUR 56.5 million. 

The increase in share capital and the refinancing of the debt is subject to
final documentation of the loan documents, which is anticipated to be finalized
no later than 16 December 2010.