HAVFISK ASA to appeal huge fines imposed by Reykjavik District Court

In a recent statement HAVFISK ASA has said that it will appeal what it sees as an incorrect judgement of Reykjavik District Court under the lawsuit brought by the administration committee in Glitnir bank, according to HAVFISK ASA. 

HAVFISK refers to earlier notification and statements in interim- and annual reports regarding the lawsuit from the administration committee in Glitnir bank. On 30 December 2013 Reykjavik District Court ruled in the case concerning HAVFISKs interest-, inflation- and currency swap agreement signed with Glitnir. The Court concluded that HAVFISK did not have the right to terminate the swap agreement in 2008. HAVFISK is thereby judged to pay ISK 1,897,563,144 in damages to Glitnir, with addition of ISK 1,081,391,516 in penalty interests. Based on official exchange rates from the Central Bank of Iceland, the total claim per 31 December 2013 is about NOK 158 million.

- We are highly disappointed by the verdict and in our opinion the Court has made an incorrect judgment. We will appeal the verdict to Iceland`s Supreme Court, says CEO Olav Holst-Dyrnes. 

In 2005 HAVFISK (former name Aker Seafoods) entered into an interest-inflation-, and currency swap with Glitnir ("the swap agreement"). The swap agreement was part of a financing plan that included an index regulated bond denominated in Icelandic Krona (ISK) and at the same time an attached interest- inflation- and currency swap was established. The financing plan implied that the running obligations for HAVFISK equaled a NOK loan with floating interests. The financing plan was facilitated by Glitnir. In 2008 Glitnir was placed under administration and HAVFISK was of the opinion that the bank in practice suspended the swap agreement and that the swap agreement was default. To avoid an uncovered exposure against ISK and Icelandic inflation, HAVFISK chose to terminate the swap agreement, and to repurchase the bond from the bond holders. The repurchase was done in august 2009. In September 2010 HAVFISK received a claim to pay about NOK 99 million from the administration committee in Glitnir for alleged loss attached to the swap agreement. HAVFISK disputed the claim with reference to that the company had the right to and correctly terminated the actual swap agreement. 15 December 2011 the administration committee in Glitnir summoned HAVFISK for Icelandic courts regarding payback of about NOK 105 million with addition of interests. The main proceedings were brought for Reykjavik District Court 26 November 2013.

Provisions for process costs at about NOK 7 million have been made in the accounts for 2013.  Further provisions will be made in the accounts for 2013 to cover the claim.

The verdict is not legally enforceable and will be appealed. Iceland has a two-level court system and the appeal case will thus go to the Supreme Court for final ruling. It is assumed that the case earliest will be processed in Iceland's Supreme Court in the autumn 2014.  An eventual payment will first take place after a legally enforceable judgment is concluded. This will imply that the verdict will not give any cash flow effect for the accounting year 2013.