Settlement of transactions with shares in Arion bank
Reference is made to notices published on the secure website of Kaupthing ehf., (“Kaupthing”), https://creditors.kaupthing.com on 14 and 15 February 2018 concerning transactions with shares in Arion bank hf. (“Arion Bank”) which have now been completed.
Kaupskil ehf. (“Kaupskil”), a subsidiary of Kaupthing, has acquired the Icelandic State’s 13% stake in Arion Bank by exercising a call option in accordance with the Shareholders’ Agreement dated 3 September 2009 between Arion Bank, Kaupskil and the Ministry of Finance on behalf of the Icelandic State, and Arion Bank has bought back from Kaupskil 9.5% of its own shares. These transactions were settled on Monday, 26 February 2018, five days later than originally planned, and the purchase price, which is determined by the relevant provisions of the before mentioned Shareholders’ Agreement therefore changed slightly, as the call option strike price increased by reference to an interest rate. Arion Bank paid Kaupskil ISK 90.203 per share, which was the same price that Kaupskil paid the Icelandic State under the call option. The remaining 3.5% was in part financed from the private placement as announced on 14 February 2018, which also settled on Monday, and in part from Kaupthing’s own funds (totaling ISK 73 million). Please see below this announcement for a table which summarises the share transactions which took place. Arion Bank will, in accordance with a resolution passed at the shareholders’ meeting of Arion Bank on 12 February, pay its shareholders a dividend of ISK 7.9 billion, which was conditional up on Kaupskil selling a minimum of 2% of the outstanding shares of Arion Bank, a condition which was fulfilled by Kaupskil.
Kaupskil’s share of the dividend is ISK 4.4 billion, of which ISK 3.4 billion will be received in March 2018 (“Net Dividend”) and ISK 1 billion will be received in October 2019, being a refund of 22% withholding tax related to the dividend (“Withholding Refund”).
The Net Dividend and the proceeds from the 1.84% shareholding in Arion Bank, ISK 3.3 billion (“1.84% Sale Proceeds”), will be paid to the Icelandic State as a prepayment of the Secured Note. The timing of this is uncertain, as it will first require a capital reduction of Kaupskil to take place, which historically has taken two to three months to take place given the required process.
By the time the Withholding Refund is eventually received, the Secured Note is likely to have been repaid. However, the Net Dividend, the Withholding Refund and the 1.84% Sale Proceeds will all contribute to the profit split between Kaupthing and the Icelandic State. The sale of the shares called from the Icelandic State do not contribute to the profit split.
An announcement by Arion Bank on the above transactions can be found on the Nasdaq Nordic web site at:
1 Trinity Investments DAC (managed by Attestor Capital LLP)
2 ELQ Investors II Limited (managed by Goldman Sachs International)