A&O, SJ Berwin and Links lead on Iceland’s debt-reduction bid

Allen & Overy (A&O), Linklaters and SJ Berwin have bagged the key mandates on the Central Bank of Iceland’s (CBI) purchase of e938m (£808.44m) in bonds issued by Dutch company Avens in a bid to reduce the country’s external debt.

Mar Gudmundsson
Mar Gudmundsson

SJ Berwin structured finance partner Vanessa Therrode, who took over as head of the team last year following the departure of Brian Carne, led on the deal for CBI. Corporate partner David Parkes is relationship partner for the bank at SJ Berwin but was not involved in the transaction.

The deal marks the first time Therrode has advised CBI, although she has previously acted for Landsbanki on other transactions.

The bonds had been pledged by Landsbanki Luxembourg to the Banque Centrale du Luxembourg (BCL) as collateral for a facility provided to Landsbanki in 2008.

Capital markets partner Salim Nathoo led the A&O team acting for BCL on UK law, along with securitisation partner David Krischer. Linklaters advised BCL
on Luxembourg aspects, fielding a team led by Luxembourg managing partner Patrick Geortay.

Luxembourg firm Arendt & Medernach acted for Avens on the deal.

CBI governor Már Gudmundsson said: “This agreement is an important milestone in the settlement following the collapse of the Icelandic banks. It’ll reduce the Icelandic economy’s external debt by more than 3.5 per cent of GDP, and will reduce non-resident ISK holdings by about one-fourth – about 8 per cent of  GDP.”

The agreement to acquire the bonds will see the bank gain control of Avens assets, which constitute the largest single holding of króna-denominated assets outside of Iceland, totalling around 25 per cent of worldwide non-domestic króna assets.

The acquisition will be partly funded by a 15-year treasury bond, totalling e402m. The bank is understood to be using in-house counsel for the bond issue.

The remainder of the ­consideration will be made up of capital held by Avens. The assets of the company will be administered by a holding company of the CBI, with a decision on their divestment yet to be made.