West Ham’s owner ‘pulled plug on XL’

Financier Bjorgolfur Gudmundsson is the most substantial investor standing behind the mountain of debt which has funded XL for the past two years and today stood accused of pulling the plug on a refinancing of the company.

Gudmundsson is the chairman of Landsbanki, the Icelandic bank which lent the £143million that financed the buyout of XL from its then parent company, the Icelandic stock exchange company Avion Group, in 2006.

That loan, however, was guaranteed by Avion, now a slimmed-down shipping and transportation group known as Eimskip, in which Gudmundsson is also a significant investor.

An Eimskip spokesman admitted: "The likelihood that the loan will fall on Eimskip has increased."

XL's chief executive and original founder Phil Wyatt was adamant today that he had been close to securing a refinancing of the company despite XL's woes being an open secret in senior travel circles.

"The business could have been saved," he said. "The problem was that nobody was prepared to take a haircut on the debt."

Wyatt said Landsbanki had at one stage signalled it was prepared to write off the debt. He also said Landsbanki had been prepared to back a £20million injection but that the business as a whole needed a £50million investment.

He said it had been hoped a private investor would come forward with the money.

It is believed that other debts on top of the buyout finance mean creditors are owed more than £200million.

Wyatt said the UK businesses of XL had been on course to rack up losses of £30million on group turnover of £800million, on the back of an £80 million rise in fuel costs.

XL's losses on fuel hedging contracts has led to a hit of up to £10million for Barclays. Barclays was a counterparty to XL's hedging policy in which losses had mounted.

Rather than calling in the liability and potentially forcing XL into insolvency a fortnight ago, it is understood Barclays converted the losses into a loan.