On Mecom's board room revolt, the German deal and new disposals
Summing up the Scandinavian media year 2008

Frettabladid back in the hands of Baugur-led consortium

Icelandic freesheet merger called off as the country's media battle debt inflation.

Now, this is not news to those of you who read Journalisten.no, but I got a bit too busy at the end of last year and ran out of time to do a follow up on this story  for my blog, so here goes:  Jón Asgeir Jóhannesson, the controversial chairman of Icelandic investment group Baugur, recently raised 6,4bn Icelandic Kroner (ISEK), to buy out the media arm of 365media, the company behind Frettabladid.


In October, news broke that the door-to-door freesheet, which is Iceland's most read newspaper, was to merge with Posthusid Arvakri, the company responsible for Iceland's biggest paid-for paper Morgunbladid. This deal was later abandoned due to the latter part's reluctance to take on the added risk of the increased debts of the merged group, said Ari Edwald, CEO of 365media.

Iceland is currently battling a banking crisis and monetary crisis of extraordinary proportions. The three main banks, accounting for about 85 per cent of the banking system collapsed in less than one week and the krona fell like a stone. 60 til 80 per cent of all companies in Iceland are said to be technically broke, and leveraged companies have seen their debts inflated.

"We got more than a billion ISEK more in debts only in October. We had to find a way to refinance our business quickly because we had 1,5bn ISEK in down payments due 5 November," said Edwald.

He explained that Jóhannesson paid 1,5bn ISEK in cash, the reminder of the price was debts he agreed to take over, but emphasised that Jóhannesson is not the sole owner of the new company. "The operation was led by him and he is still the majority owner, but we are working to get other investors on board," he said.

Baugur's role as a dominant media investor on Iceland has been controversial, but Svánborg Sigmarsdottir, a senior reporter with Frettabladid, said most of the freesheet's journalists were just relieved when Jóhannesson put the urgently needed money on the table.


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