All You Need to Know about the Fall and Return of Iceland’s Sole Billionaire
To be among the wealthy places you in an invincible position. Reviewing the wealthiest celebrities today, will any of them ever wake up to all their wealth disappearing? But this remains a possibility, if you mismanage finances or play with fire. Here is a story about a man who played with fire and threw away his fortune. But there was a silver or platinum lining. Iceland’s only billionaire is Björgólfur Thor Björgólfsson, a man who saw both the highest of highs, as well as the lowest of lows, in a short span! Björgólfsson was a billionaire in 2005, given to living grand and life was so smooth.
For his 40th birthday, he flew 120 friends in a 767 aircraft to Jamaica to celebrate, with 50 Cent and Ziggy Marley performing at the beachfront. He also ranked among the 250 richest people world-wide and all this was achieved in ten years. His enterprises stretched across the globe, from Bulgaria to USA. But, disaster struck Björgólfsson along with many more. First, let’s understand how Björgólfsson accumulated his fortune and his vast businesses. He owned soft drink and beer companies, which he sold to Heineken for $100 million in 2002. He purchased a 46% stake in Landsbanki with his father, using some profits generated from their business sale to Heineken along with some credit from a rival bank. Björgólfsson was a man who buried himself in debt, borrowing liberally against equities, dangerously. Björgólfsson then acquired Actavis Company with a $0.4 billion buyout in 2007. Then came the economic crisis!
The Fall of Björgólfsson
Enter the global financial crisis in 2007-08, the great big blow that brought the world to its knees. Björgólfsson lost most businesses and his entire wealth. The financial crisis popped Björgólfsson’s credit bubble, and Deutsche Bank wanted more cash to be injected into the deal. Björgólfsson borrowed $230 million against his own bank, to tie everything together. The Iceland government seized a bank and Landsbanki was the next prospective victim next. By 7th October 2008, the entire country had gone bankrupt, their currency was now worthless and their stock exchange shut down. Thousands were left jobless, losing savings too. Björgólfsson took the majority of the blame for this economic blast, thereby becoming the most hated man in Iceland.
The Return of Björgólfsson
In 2014, Björgólfsson took steps to regain his billionaire status again! How was it possible? The key was Actavis, the drug company. The banks would lose heavily if Actavis bombed during the crisis, and all worked to keep it solvent. Actavis was tied into Björgólfsson’s stake, and as Actavis was insolvent when Iceland went under, he lost nothing. A 100 professionals all representing Björgólfsson’s creditors, met in London, to restructure his debts. The creditors forced Björgólfsson to sell his private yacht, Ferrari, plane, his Reykjavik house and a cottage in Thingvellir, besides claiming dividends from all holdings, including Actavis.
When Watson purchased Actavis, Björgólfsson sacrificed cash claims for 4.3 million shares in Actavis, valued at $700 million, and he paid off debts in 2014, making him debt-free by mid-2014. His net worth is $2.2 billion, a billionaire once more! A remarkable feat as Björgólfsson lost all and regained it soon. Wealth is dynamic, and if careless about finances, it becomes volatile, disintegrating overnight.
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