Sýn hf.: Sale and leaseback of passive mobile infrastructure
Today Sýn hf. signed an agreement pertaining to a sale and leaseback of passive mobile infrastructure to international investors.
The terms indicate that the profit from the transaction amounts to over 6 billion ISK.
The financial statements of Sýn hf. is prepared in accordance with International Financial Reporting Standards (IFRS). Under IFRS the transaction will be treated as sale and leaseback of the assets. According to that treatment, the gain of the transaction will not be recognized from the outset through P/L. Instead it will be proportionate based on the fair value of the asset sold and the present value of expected lease liability. Currently this is estimated to be around 80-85%. Thus 15-20% of the profit will be recognized through the P/L at closing and the remainder will be applied towards the right of use assets which will be reflected in lower depreciation over the estimated life of the lease agreement. Final assumptions in the estimate of the present value of the lease liability have not been fully verified and thus these assumptions may change.
As the right of use asset will be considerably lower than the lease liability the effect on EBITDA will be immaterial. The interest expenses on the lease liability will be recognized fully through financial expenses.
The transaction will strengthen the balance sheet and improve the liquidity position of the Company.
The terms assume a long-term lease agreement which will guarantee Sýn’s access to the passive mobile infrastructure. All active mobile equipment will be owned and operated by Sýn hf.
The agreements are subject to approval of the Icelandic Competition Authority, as well as other closing conditions that are conventional in this type of Transaction.
