Glitnir and Pension Funds Conclude Debt Settlement Agreement

Glitnir hf. and twelve pension funds, together with their subsidiary funds, have reached an agreement on debt settlement. This framework agreement will provide for comparable settlements between each individual fund and Glitnir hf. of their mutual claims.

The settlement covers all the parties' claims, including claims in connection with currency hedge contracts originally concluded to reduce the exchange rate risk of the pension funds' asset portfolios. Excluded from the agreement, however, are disputed claims concerning subordinated and capital-guaranteed bonds, where the pension funds claims against Glitnir exceed what the Winding-up Board has recognised. Agreement has been reached on referring these disputes to the courts for resolution.

Negotiations on settlement of the currency hedges began at the end of 2008. Overall, the financial impact of the framework agreement on pension funds' positions is within the limits provided for in precautionary entries in their annual financial statements. This does vary from one fund to the next, however, since several of them can now recognise part of the precautionary entries as income, while others will have to add to their precautionary entries. This is due to the varying composition of the claims and obligations of individual pension funds.

The agreement is significant, as it eliminates uncertainty concerning assets and liabilities for both parties and obviates the need for onerous and lengthy litigation.