Skeljungur hf.: Skeljungur agrees heads of terms and letter of intent regarding sales of real estate for 8,788 million ISK

Last 11 August, a notice was published to the effect that Skeljungur had made a decision to sell certain real properties and sites and place them in a formal divestment process with a view to leasing them back, in full or in part. Íslandsbanki has been Skeljungur’s advisor in the divestment process from the outset.

Skeljungur and Kaldalón have now entered into heads of terms outlining the principal terms of a purchase agreement on the acquisition by Kaldalón of 13 of the properties that were placed in a formal divestment process. In addition, Skeljungur has approved two letter of intents on the sale of 5 properties to other parties and is negotiating the sale of one property, as further detailed below:

Terms of Agreement with Kaldalón hf.

According to the Terms of Agreement with Kaldalón, Kaldalón will purchase properties owned by Skeljungur. These are operating assets that are leased backed on a long-term basis. The assets in question are:

1. Bústaðavegur 20, 108 Reykjavík,

2. Búartorg 6, 310 Borgarnes,

3. Dalvegur 20, 201 Kópavogur,

4. Fiskislóð 29, 101 Reykjavík,

5. Fitjar, 260 Reykjanesbæ,

6. Grjótháls 8, 110 Reykjavík,

7. Gylfaflöt 1, 112 Reykjavík,

8. Hagasmári 9, 201 Kópavogi,

9. Miklabraut 100, 105 Reykjavík,

10. Miklabraut 101, 105 Reykjavík,

11. Óseyrarbraut 2, 220 Hafnarfjörður,

12. Skagabraut 43, 300 Akranes; and

13. Suðurfell 4, 111 Reykjavík.

Orkan IS ehf will lease back the properties from Kaldalón; Orkan IS ehf. is wholly owned by Skeljungur hf. The estimated selling price of the properties, assuming unchanged circumstances, is 5,989 million ISK, to be paid partly in cash, amounting at a minimum to 3,593.4 ISK, and in part with shares in Kaldalón in the value of up to 2,395.6 million ISK. The number of shares is based on the average published market price of Kaldalón on First North in the two weeks preceding this notification. It is assumed that the properties will be leased to Orkan IS ehf. for a term of 20 years, and that Skeljungur will issue to Kaldalón a parent company guarantee of rental payments for 30 months from delivery. Following that period, the guarantee will be replaced by traditional rental guarantees.

The transaction is subject to conditions on an agreement being reached on the substance of final purchase and lease contracts, approval being obtained by a shareholders' meeting of Skeljungur and the positive conclusions of due diligence.

The representatives of Strengur hf. on the board of directors of Skeljungur did not participate in the process of the matter whereas Strengur hf. controls holdings in both Skeljungur and Kaldalón.

Letter of intent with F33 ehf. regarding a development project

Skeljungur has also signed a letter of intent with F33 ehf., a company in the ownership of the couple Hilmar Þór Kristinsson and Rannveig Eir Einarsdóttir, on the development of the properties at:

1. Birkimelur 1, 107 Reykjavík;

2. Skógarhlíð 16, 105 Reykjavík;

3. Kleppsvegur, 104 Reykjavík; and

4. Reykjavíkurvegur 58, 220 Hafnarfjörður.

According to the letter of intent, Skeljungur and F33 hf. will establish a separate company to purchase the above properties and work on their development in co-operation with the municipalities involved. Ownership of the joint company will be divided equally between Skeljungur and F33. The equity contributed by Skeljungur to the joint company will take the form of the real properties listed above, and F33 will contribute a development site at Hnoðraholt in Garðabær. The estimated equity contribution of Skeljungur in the form of the real properties is valued at 2,058.5 million ISK according to the letter of intent. It is anticipated that the properties will be leased to Orkan IS ehf.

Letter of intent with Ötull ehf. and ongoing talks with Reginn hf. regarding the sale of real properties

According to a letter of intent with Ötull ehf., Ötull will purchase the property at Austurströnd 7, 170 Seltjarnarnes and lease it back to Orkan IS ehf. Furthermore, Skeljungur holds talk with Reginn hf., based on a heads of terms, regarding the purchase of the property Litlatún in Gardabær that will be leased back to Orkan IS ehf.

The final transactions are in both cases subject to provisos, such as the satisfactory conclusion of due diligence and approval by the competent parties. The estimated price of the real properties is 740 million ISK, to be paid in part in cash and in part with the conveyance of real property.

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If the above transactions materialise, the estimated selling price of the listed properties will amount to 8,788 million ISK; their book value as at last 30 September amounted to 2,573 million ISK.

The estimated rental expenses of Orkan IS ehf. regarding all of the aforementioned properties will amount to 493 million ISK per annum, but 433 million ISK if account is taken of the reduction in the operating cost of the properties. The estimated rental income to Orkan IS ehf. resulting from the re-leasing of the above properties to third parties will amount to 115 ISK per annum.

Further information on the impact of the above transactions on the performance and financial position of Skeljungur hf. will be provided as provisos are lifted.

Skeljungur has decided to postpone the sale of its the properties at Laugavegur 180 in Reykjavik and the facilities at Baulan in Borgarfjörður for the time being. If the transaction is successful, Skeljungur will own about 20 properties.

For further information, please contact Árni Pétur Jónsson, CEO, fjarfestar@skeljungur.is

www.skeljungur.is
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