Corporate Finance

Arctica Finance hf‘s Corporate Finance department provides various advisory services to SME´s, large cap enterprises, institutions and public entities, both domestically and internationally. The advisory services focus primarily on financial restructuring, financing, mergers and acquisitions, divestments, strategic review, issue of financial instruments, valuations and impairment tests.

Financial restructuring

In the wake of the financial turbulence in Iceland in recent years and volatile market conditions many corporations and institutions have had to undergo financial restructuring.

Arctica Finance provides pragmatic advice on financial restructuring to its clients. The employees of Arctica‘s Corporate Finance hold extensive experience and knowledge in the field of financial restructuring. Arctica's services in financial restructuring include:

  • Advice on financial structure of the client‘s balance sheet.
  • Prepare proposals on alternatives and possibilities regarding refinancing.
  • Evaluating business plans and CAPEX plans, considering free cash flow to finance for the servicing of interest and capital repayments, other liabilities and dividends.
  • Prepare proposals on new financial composition, i.e. amendments of terms and interest levels, conversion of debt to equity and issue of new equity. The aim of such proposals is to align debt repayment profiles to expected cash flow to finance.
  • Produce presentations to lenders and/or investors.
  • Manage negotiations with new and/or existing stakeholders.
  • Assist in preparation of proposals, agreements and other legal documents.

Financing

The employees of Arctica Finance have decades of experience in analyzing available financing options and selecting optimal options. Considerable value increase can often be achieved by optimizing forms of financing, considering risk, length and terms of financing. Arctica‘s service regarding financing includes inter alia evaluating financing options, negotiating with financial institutions, preparation and executions of equity issue and financing of leveraged acquisitions.

Mergers and acquisitions

Searching and analyzing acquisition targets, both domestically and internationally, and identifying how to approach owners, management or other stakeholders to explore the possibilities regarding acquisition, as well as advising on execution and financing of such acquisitions is part of Arctica‘s services.

Divestments

Arctica provides various advices regarding divestment of corporations and business units. Arctica works closely with its clients in such projects to prepare a divestment plan, identify potential acquirers and maximize the value of the divested assets. Clients have diverse ideas and ambitions regarding goals for divestments and Arctica's advice focuses on achieving those goals.

Strategic review

Shareholders and lenders constantly contemplate their options regarding maximizing the value of their assets. Arctica offers analysis of available options regarding maximizing shareholder value and/or debt recovery. Stakeholders procure such review for example to identify when would be the optimal time to exit investments, if and when corporations should sell of individual business units or if they on the contrary should grow business units through acquisitions.

Issue of financial instruments

Arctica Finance assists companies, municipalities and institutions in procuring capital through issuance of debt and/or equity. Such services include:

  • Analysis of the issuer
  • Advice on forms of financing
  • Communication with investors
  • Preparation of presentation material
  • Preparation of Information Memorandum and Prospectus
  • Managing issuance of securities
  • Advice on placement of securities

Valuations

Arctica focuses on diligent and thorough analysis in its valuation of businesses and business units and has prepared a vast number of valuations for all types and sizes of businesses. In the preparation of such valuations it is paramount to identify the uniqueness of each business unit and its environment and tailor all assumptions accordingly.

Impairment tests

Arctica prepares impairment tests on goodwill for companies on the basis of international accounting standard nr. 36 (IAS 36). Impairment tests are part of accounting procedures and reports for companies incorporating international accounting standards. Impairment tests are different from valuations as the purpose is primarily to identify if the “value in use” of the asset, as operated by its owner, achieves a certain minimal value, rather than evaluating the market value of the asset. If the value in use descends below the book value then the goodwill has to be adjusted downwards accordingly in the company's profit and loss statement.