Iceland America Energy (IAE), which is in majority ownership of Reykjavík Energy Invest (REI), the investment arm of Reykjavík Energy (OR), appears to be on the brink of bankruptcy. IAE’s assets in the US are not worth much and may not cover its debts.
Geothermal energy in Iceland. Photo by Páll Stefánsson.
IAE is currently working on several projects in the US but they are not expected to amount to much, according to Fréttabladid.
“I expressed my view to the board that the only way to prevent bankruptcy was to collect assets. My ideas were rejected; they meant that the owners of IAE wouldn’t get anything,” Hezy Ram, owner of the energy company Ram Power Inc., told Fréttabladid.
Geysir Green Energy (GGE), former majority owner of IAE hired Ram Power Inc. to estimate the company’s position in December 2008. It concluded that IAE was facing serious difficulties.
Tal Finney, IAE board member, presented a strategy to save the company from bankruptcy in January, including a contribution from REI of ISK 340 million (USD 3.0 million, EUR 2.2 million) in working capital.
Finney believes that the company’s worth can multiply in a matter of months. However, according to Fréttabladid’s sources, there are slim chances of restoring IAE in the current business environment in the US.
Finney’s motives have also been questioned because he has claims against IAE. Finney has provided the company with legal counsel and general consulting.
Kjartan Magnússon, chairman of REI, recently went to the US to meet with Finney. Magnússon dismisses claims that IAE is on the brink of bankruptcy, arguing that there are efforts underway to maximize the company’s value.
Magnússon also said that it is out of the question that REI would provide IAE with new working capital as Finney suggests.
IAE used to be in the ownership of Enex, which was owned by GGE (73 percent) and REI (26.5 percent). Enex was divided between REI and GGE in February, leaving REI with Enex’s 84 percent in IAE. GGE took over part of Enex’s projects in Germany and China. REI is owned by OR, in which Reykjavík City holds a majority stake.
Click here to read more about REI and GGE.