Gov’t-controlled Icelandic bank takes over Premier League club West Ham to prevent bankruptcy

Bailed-out Icelandic bank takes over West Ham

LONDON — West Ham was taken over by an Icelandic bank in government control Monday to prevent the Premier League club from going into bankruptcy.

A moratorium on West Ham chairman Bjorgolfur Gudmundsson’s debts was set to expire Monday in Iceland, so Straumur Burdaras Investment Bank assumed ownership of the club after having provided the finances for its 2006 takeover.

CB Holding, formed by the creditors of Gudmundsson’s holding company, took control of West Ham in what Georg Andersen, Straumar’s head of corporate communications, said wasn’t a cash deal and a “complicated transaction.”

Gudmundsson, who will leave the Hammers, had been looking to sell since being hit heavily by the global economic meltdown, primarily with the collapse of Icelandic bank Landsbanki, in which he had a 41 percent stake.

“We decided to take over the club mainly to protect our interests and do the best thing for the club,” Andersen told The Associated Press. “The former owners of West Ham were going out of moratorium today, which meant it was most likely they would go into bankruptcy, and under league rules the club would either be penalized with a points reduction or relegation.

“The value of the asset would have decreased enormously. As a bank, we would have preferred the owners to keep the club and had success with the whole thing, but that is not the case. We (had) to do something.”

The Icelandic government is in temporary control of Straumur after it became one of the country’s last major banks to collapse after running out of liquidity. Straumur is currently restructuring from being an international investment bank into an asset management company.

Andersen said that Straumur had much larger assets than West Ham and said finding a buyer for the club was not an option.

“We don’t believe it is advisable to sell the club in the current markets,” he said. “So we decided to hold on and support them for the next two years at least and maybe longer depending how things develop.”

Andrew Bernhardt, a senior director with Straumur and majority shareholder in CB Holding, will become a non-executive chairman of the club.

“I can assure fans we will sanction investment in new players, but all within the parameters of sensible budgeting,” Bernhardt said. “CB Holding has no intention of changing the executive management or direction of this club.

“It will be my job to help facilitate this continued process on the pitch, while ensuring the club’s success is built on a strong financial footing.”