Glitnir Banki bondholders to receive composition distribution Jan. 13

By Caroline Salls

Pittsburgh, Jan. 7 – Glitnir Banki HF bond trustee Nordic Trustee ASA said the company’s composition is about to be implemented following approval from creditors and the District Court of Reykjavik.

According to a notice from the bond trustee, the Central Bank of Iceland also granted the necessary exceptions to Icelandic capital control rules to allow the composition to be implemented.

Nordic Trustee said the composition involves a schedule for distributing the remaining assets of Glitnir to creditors, with the exception of a stability contribution, costs and some other allocations.

In accordance with the approved composition, the initial cash distribution for creditors has been received by the trustee and will be distributed to bondholders, minus funds needed to cover costs. The distribution will be made on Jan. 13 to bondholders of record as of Jan. 11 and will equal 30.2% of the remaining principal amount of the bond loan.

Bondholders will also be entitled to receive new notes issued by Glitnir and an equal number of new ordinary shares, although the trustee said it has not yet received confirmation from Glitnir regarding the distribution of the notes and shares.

Nordic Trustee said Glitnir was placed in administration by the government of Iceland in October 2008 and was granted a moratorium on Nov. 24, 2008.

The company formally entered into a winding up procedure on Nov. 22, 2010, and the trustee declared the bonds to be in default and registered a claim with the winding-up board.

The trustee said the composition was negotiated between Glitnir creditors and Icelandic authorities in 2015 to avoid a stability tax equal to 34% to 39% of Glitnir’s assets, which would have been imposed if the composition was not agreed to before the end of 2015.

Because a composition was agreed by the end of 2015, Glitnir will pay a stability contribution of 24% of its assets, instead of the stability tax.

Reykjavik, Iceland-based Glitnir is a commercial and investment bank with operations in 10 countries, including Nordic countries, the United States and China.

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