Personal Guarantees—High-Stakes Commitment

“the question I always kept in mind in the debt bubble was: how much am I personally guaranteeing? That was a checkpoint for me. The answer, when the markets crashed, was that I had personal guarantees of €400 million. One of my advisers, a restructuring specialist, told me that this was the largest personal guarantee he had ever seen in a restructuring. After my father went bankrupt and his €250 million share of our joint guarantees was added to mine, the total rose to €650 million and the proportion of the balance sheet I was guaranteeing rose from 12 per cent to 20 per cent.”

“I needed to put more money into the business, by far one of the biggest companies in Iceland, so that it wouldn’t be taken over by Deutsche Bank. We had assets enough, and were working on selling them, but for the time being we had liquidity problems, so I borrowed €150 million from Landsbanki in March 2008 to rescue Actavis and fund salaries. This is what I was most criticised for in Iceland after the crash. ‘How could you borrow this in September 2008?’ my detractors cried. But I had started the process in March, borrowing in monthly instalments, with the last and largest payment coming in September. I gave a personal guarantee against the borrowings and, most importantly, that guarantee involved me pledging my holdings in Play, the Polish telecoms company, which was my most valuable and debt-free asset. Even so, the loan proved insufficient to get Actavis back on track and we were still busy scuttling around when the financial crash struck.”