E-mails between the management team at FL-Group seem to indicate that assets sold to Northern Travel Holding (NTH) at year end 2006 were overvalued on purpose to deceive stakeholders about the real condition of the companies involved in the transactions. Among the assets being transferred were the Danish low budget airline Sterling and Iceland Express, an Icelandic low budget travel company.
Hannes Smárason, President of FL-Group at the time of the e-mail
Among the main players in these transactions were Pálmi Haraldsson, owner of Iceland Express and Sterling and Hannes Smárason, President of FL-Group. Both were close associates of Jón Ásgeir Jóhannesson, Chairman of Baugur Group and FL-Group.
Vidskiptabladid (Business Magazine) published the first of three articles on the subject on Thursday, September 2.
One of the e-mails was from Jón Sigurdsson, then a manager of FL-Group and later president of the company, to Einar Thorsteinsson, another manager at the company. It goes like this in English translation:
From: Jón Sigurdsson
Sent: 6. November 2006 at 23:27
To: Einar Thorsteinsson
Subject: RE: ScanTravel
Let’s put a password on this.
Things to study:
* Are we happy with this structure? I am wandering whether we should demand a seller’s loan against the travel stores.
* Is IE [Iceland Expressed] overvalued as much as ST [Sterling], relatively? That’s a key issue.
* Interest on sellers loan, 15-20% more realistic. 30% will never happen. Must put up some imagined IRR case in 2-3 years.
* Must have a shareholders’ agreement on how we will increase debt on the company, etc.
* Maybe we have to insure at least equal treatment on the seller’s loans. I don’t really know how that is done. Maybe we have to do special loan agreements on this; these are large amounts of money.
List all the guarantees that FL has given. Newco has to take them over.
Scantravel became Northern Travel Holding. Hannes Smárason was president of FL Group when the above transaction took place. Scantravel was the project name of Northern Travel Holding (NTH). Newco is the company NTH.