In a press release on April 8th regarding actions taken by Reykjavik Energy (OR) and its subsidiaries due to Covid-19, it was stated that OR‘s Board of Directors had that same day approved to increase the company‘s authorization for financing in the form of bonds, bills or bank loans from ISK 13bn to up to ISK 30bn. As stated in the press release, the reasons for this increased financing need are increased investments and dividend payments and generally worse economic conditions overall. In addition, a part of this increase will be allocated to refinancing loans from OR‘s owners.
OR has a very strong strong financial position, with a cash position of over ISK 21bn in addition to access to credit lines of ISK 7bn through 2020. The company is operationally robust and well positioned for adverse business conditions for the foreseeable future. The company has conducted stringent stress tests which it can withstand, regardless of intended financing.
The total financing need of OR for this year is not known at this stage and will be determined by both internal and external factors. Approximately half of this years financing is anticipated to be in the form of bank loans from domestic and international banks, with the remainder in the form of domestic bond issuance, based on market conditions. With approximately ISK 5bn worth of bonds already issued by OR in 2020, bond issuance for the remainder of the year is anticipated to be approximately ISK 10bn, given that market conditions will be favorable.