UPATE TO STRAUMUR`S CREDITORS
Reykjavik, 1 February 2010
This note sets out the key developments in relation to the restructuring of Straumur‑Burdaras Investment Bank hf. ("Straumur" or "the Company") from the date of the Creditors' Meeting on 8 December 2009.
Operating Update
The business continues to operate as normally as could be expected, given the operational challenges in relation to dealing with counterparties and motivating and retaining staff arising from Straumur's current situation. This is in large part thanks to the continued hard work and commitment of our staff.
Management continues to take proactive steps to develop and implement strategies to enhance and realise value from Straumur’s assets. The two most significant transactions over the last two months have involved Solstra and West Ham:
Solstra, a joint venture established by Straumur and Solstice (a Swiss based investment company) to take over the Magasin and Illum department store operations previously owned by Baugur and the associated real estate portfolio owned by another Icelandic company (Stodir), has successfully concluded the sale of the department store operations of Magasin to Debenhams plc. The sale agreement included Debenhams entering into a 25 year lease agreement, which has enhanced the attractiveness of the Magasin real estate portfolio.
Straumur has successfully concluded the sale of 50% of its interest in CB Holding ehf., the ultimate owner of West Ham United Football Club.
Whilst a number of major assets have now been stabilised, a number of assets continue to require very close involvement by Straumur management.
Cash continues to be managed tightly, and management continues to believe that the Company will have sufficient cash to achieve a managed work out without the need for additional funding.
Development and Implementation of the Restructuring Plan
As communicated at the Creditors' Meeting held on 8 December 2009, there have been a number of creditors' claims which have not been agreed by the Winding-Up Board ("WUB"), or have been challenged by other creditors, and, as a result, have been referred to the Icelandic Courts by the Winding-Up Board.
The current status of the key disputed claims set out in the presentation to creditors dated 8 December 2009 can be summarised as follows:
Bondholders' Disputed Priority Claims: The oral hearing in the District Court of Reykjavik ("the District Court") has taken place on 1 February and a ruling is awaited from the District Court.
Old Landsbanki Disputed Priority Claims: Written submission of arguments and evidence have been filed and the oral hearing in the District Court has been set for 8 February.
ISB Bond: Written submission of arguments and evidence have been filed by both parties and notification of the date for the hearing of oral arguments is awaited from the District Court.
Glitnir and Old Landsbanki Disputed Amounts: Written submission of arguments have not yet been filed in relation to the Glitnir Disputed Amounts Claim. For the time being, the Old Landsbanki Disputed Amounts Claim is combined with the Old Landsbanki Disputed Priority Claims. Due to the complexity of the claim, it is expected to take longer to resolve than the priority claim part of the dispute, assuming Old Landsbanki's claim is split into two parts by the District Court in accordance with the request of the parties.
As set out at the Creditors' Meeting on 8 December 2009, the Company and the WUB do not believe that they will be in a position to put forward a Composition to unsecured creditors until the Bondholders and Old Landsbanki Disputed Priority Claims are resolved.
Assuming that the final decisions of the District Court are appealed to the Supreme Court of Iceland (the “Supreme Court") and that the disputes take a further two months to be finally resolved by the Supreme Court, the Company and the WUB believe that the Disputed Priority Claims are unlikely to be finally determined by the Courts prior to May 2010.
With regard to the other creditor claim disputes, the WUB, in conjunction with the Company, continues to examine whether there are appropriate mechanisms that can be built into the Composition in order to enable the restructuring to be implemented, notwithstanding that certain of these disputes may not have been finally determined by the Icelandic Courts.
Finally, the Company continues to be in close and constructive dialogue with its Informal Creditors’ Committee, who are being kept fully apprised of the progress of the restructuring and, together with its financial and legal advisers, continues to work to finalise the formal documentation required for the Composition.
Next Steps
The Company is planning to provide a further update on the progress of the restructuring next month.
In the meantime, we will continue to keep creditors updated on the progress of the restructuring as appropriate.