Father and son Björgólfur Gudmundsson and Björgólfur Thor Björgólfsson, often called Iceland’s first and second billionaires, have allegedly offered to pay 40 to 50 percent of their ISK 6 billion (USD 47 million, EUR 34 million) debt to Kaupthing bank, but would like the bank to write off ISK 3 billion (USD 23 million, EUR 17 million). The father and son want to try and pay ISK 500 million (USD 4 million, EUR 3 million) of their debt this year.

Björgólfur Gudmundsson. Photo by Geir Ólafsson.

Björgólfur Thor Björgólfsson. Photo by Geir Ólafsson.

According to Fréttabladid’s sources, the loan was originally made to their holding company Samson to finance a 45.8 percent share in Landsbanki when it was privatized by the state in 2003.

The newspaper’s sources reveal that Kaupthing’s claim against Samson is ISK 4.9 billion (USD 38 million, EUR 27 million) without penal interests, while the claims against Samson’s bankrupt estate with penal interests and other added costs amounts to ISK 5.9 billion (USD 46 million, EUR 33 million).

Fréttabladid reported on April 9, 2009 that New Kaupthing had initiated court proceedings Gudmundsson and Björgólfsson in March over the debt. However, the father and son never received the subpoena for reasons that are not clear.

Gudmundsson and Björgólfsson are personally responsible for the debt and if one of them is unable to honor his obligations, the other is held responsible. The purchase price for the state’s share in Landsbanki was estimated at ISK 11.2 billion (USD 87 million, EUR 63 million) in 2002.

CEO of New Kaupthing Finnur Sveinbjörnsson would not confirm the allegations. “The only thing I’m willing to confirm is that talks have been ongoing on how they [Gudmundsson and Björgólfsson] would like to settle the debt.”

New Kaupthing’s chairwoman Hulda Dóra Styrmisdóttir is equally unwilling to confirm the story. She wouldn’t say whether she finds it likely that the board of Kaupthing would accept such an offer. Ultimately, however, the board has to make the decision on whether such an extensive write-off is approved.

According to Fréttabladid’s sources, the offer made by Gudmundsson and Björgólfsson is considered reasonable within Kaupthing and is likely to be submitted to the bank’s board.

Ásgeir Fridgeirsson, spokesman for Gudmundsson and Björgólfsson, would not comment on this story when contacted yesterday.