Saving Iceland

Iceland Review
10/05/2007

Reykjavík City Council Quarrels about REI-GGE Merger

Members within the Independence Party of Reykjavík City Council are in a hefty debate about the merger between Reykjavík Energy Invest and Geysir Green Energy, announced Wednesday. Reykjavík City holds a share in REI.

REI was founded in March as the daughter company of Reykjavík Energy (OR) and the board of OR and their shareholders agreed on the merger at a meeting on Wednesday, ruv.is reports.

During the meeting it became evident that the attendees had very different opinions on the role and policy of OR and whether OR, a public company, should participate in such risky private business investments, which is where REI seems to be headed.

Some of the Independence Party members who hold a seat in the City Council said the merger happened too quickly and that their opinions, as representatives voted by Reykjavík residents to protect the city’s interests, had been ignored.

Independence Party council members approached by ruv.is would not comment on the record. One member, Gísli Marteinn Baldursson, only said the case was “sensitive” and that he needed to discuss it further with his colleagues before making any comments.

According to ruv.is, the merger will have certain consequences for the OR board—city councilmen who have a seat there may have to leave the board, including Reykjavík Mayor Vilhjálmur Th. Vilhjálmsson.

Following the debate, Vilhjálmsson requested last night that Bjarni Ármannsson, chairman of REI’s board, allow all OR employees to have the same preemptive rights to purchase shares in REI after the merger, Fréttabladid reports.

Gudmundur Thóroddsson, who is on leave from his position as OR’s CEO and the CEO of REI, was permitted to purchase shares with a par value of ISK 23 million (USD 373,000, EUR 264,000) at the currency rate of 1.3.

Three geologists, two engineers and one economist were permitted to purchase shares with a par value of 7.8 million (USD 127,000, EUR 90,000) at the 1.3 currency rate, but other OR employees were only allowed to purchase shares with a par value of up to ISK 300,000 (USD 4,900, EUR 3,400).

Ármannsson said REI’s board would review the mayor’s request.

Iceland Review
10/04/2007

REI and GGE to Merge and Become Energy Giant

Reykjavík Energy Invest (REI) and Geysir Green Energy (GGE) announced at a press conference yesterday that the companies would merge under the REI name. After the merger, the company will be worth ISK 65 billion (USD 1.1 billion, EUR 748 million).

“The merger is a way to achieve rapid growth. Size matters, because the companies we will compete with and be in competition with are huge energy companies,” Hannes Smárason, chairman of GGE’s board and CEO of FL Group, told Morgunbladid.

“With an increase in size we will have a larger say as well as access to more funding and thus take on larger projects, which are the most profitable and exciting projects in this business,” Smárason added.

“I am convinced that a merger will bring many opportunities and that there is a bright future ahead,” said Bjarni Ármannsson, who will serve as chairman of the new company’s board.

“But it depends of course on who is holding the cards. It is the responsibility of those in charge to create value. It is far from being within reach, but one could say that time is on our side and the wind is at our backs,” Ármannsson concluded.

Smárason and Ármannsson will introduce the merger at an FL Group investor meeting in London today.

See also:

Geysir Green Energy acquires shares in WGP
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Are ALCOA to be given Landsvirkjun on a silver plate?
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