XL Leisure Group Goes Bankrupt—Heat on Eimskip Skip to content

XL Leisure Group Goes Bankrupt—Heat on Eimskip

UK-based tour operator XL Leisure Group, a former daughter company of Icelandic shipping company Eimskip, has gone bankrupt, leaving a hefty ISK 27 billion (USD 295 million, EUR 212 million) loan guarantee on Eimskip’s shoulders.

Earlier this week two of Eimskip’s principal owners, billionaire father and son Björgólfur Gudmundsson and Björgólfur Thor Björgólfsson, announced their intentions to assume the loan in the case that XL defaults and delay payment. This acquisition is said to be convertible into shares in Eimskip.

Eimskip reported losses of around ISK 2.5 billion (USD 27 million, EUR 20 million) in the second quarter of 2008. The cost of capital for the acquisition of XL Leisure Group exceeded ISK 4 billion (USD 44 million, EUR 31 million). The effect of XL’s defaulted loan is not included in the Q2 2008 report.

In comparison, Eimskip posted earnings of ISK 1.8 billion (USD 20 million, EUR 14 million) in Q2 2007, ruv.is reports.

XL Leisure Group’s bankruptcy also affects investment bank Straumur as the bank’s current exposure totals ISK 5.7 billion (USD 62 million, EUR 45 million). However, a statement from Straumur states that that amount is low considering the bank’s capital base is EUR 1.5 billion (USD 2.1 billion).

According to the same statement, Straumur has reached an agreement to assume the operations of XL Leisure Group in Germany and France where the bank believes the company’s operations are “financially viable.”

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