Burkle Bets On Iceland
Not to be dissuaded by the republic’s losses, Yucaipa will head the restructuring efforts of the shipping and logistics company Hf. Eimskipafelag Islands.
July 1, 2009
Ron Burkle is betting that the worst of Iceland’s economic troubles are behind the embattled Nordic island.
Following the collapse of the country’s three largest banks last October and the resignation of Prime Minister Geir Haarde in January, Burkle’s private equity firm has invested heavily in the ailing republic. The Los Angeles-based firm, The Yucaipa Cos., will lead the $2 billion restructuring of Iceland-based Hf. Eimskipafelag Islands. The shipping and logistics company was founded in 1914.
Separately, Yucaipa purchased a 49% stake in Versacold International Corp., and also bought an option for a 51% stake the refrigerated storage company’s parent firm, Eimskip Tango ehf, also known as Tango. Terms of the transaction were not disclosed.
Yucaipa said the transaction is similar to, but will be managed separately from, Yucaipa’s current portfolio company, Atlanta-based Americold RealtyTrust.
Versacold was advised by RBC Capital Markets and TD Securities.
The move is a bout of encouragement for Iceland’s battered economy, which has embraced the recovery efforts of Prime Minister Johanna Sigurdardottir, who heads the country’s center-left coalition government, and Mar Gudmundsson, chief of Iceland’s central bank. Last year, the county’s national debt had risen to over 8x GDP.
Also on Wednesday, as part of an attempt to bring stability to the region’s financial conditions, Norway’s central bank, Norges Bank, signed a loan to Iceland, committing €1.775 billion in long-term loans.
Beginning in 2002, former President Bill Clinton served as an advisor to Yucaipa. He detached himself from the private equity firm in anticipation of his wife’s 2006 run for the U.S. Senate. Expected payments have been estimated near $20 million, though Clinton said he would not receive some of that money after severing ties with Yucaipa.
In 2005, Burkle established the Follieri/Yucaipa Investments LLC, a joint venture with Raffaello Follieri, head of the Follieri Group. Follieri was later sued by Burkle for "willfully and systematically misappropriating” funds. In October 2008, Follieri pleaded guilty in September to fraud and conspiracy charges, and was sentenced in to four-and-a-half years in prison.
Burkle founded Yucaipa in 1986. Calls placed to Yucaipa and Versacold were not returned by press time.
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