Iceland is home to just one billionaire. A billionaire with whose journey to the three-comma-club has been filled with extreme ups and downs. In fact, ups and downs are pretty much a family tradition for Björgólfur Thor Björgólfsson. It took the 54-year-old just 10 years to become a billionaire… and just a year to lose it all.
Back in 2007 Björgólfur was living large. He had been a billionaire for two years and was about to turn 40. So he chartered a jet and flew 120 friends to Jamaica for a private Ziggy Marley and 50 Cent concert on the beach.
That was the peak.
Unfortunately, within a year had had lost everything. He wasn't the first person in his family to lose vast sums of money. At separate points in history, Björgólfur's great-grandfather, grandfather, and father also went bankrupt. Thor's grandfather, Thor Jensen actually went bankrupt twice. Thor's dad grew up in the working class and went on to run the second-largest shipping company in Iceland. He ended up being arrested on fraud and embezzlement charges, found guilty, and sentenced to 12 months probation.
Earning A Fortune
Thor set out to redeem his father's reputation. After college in the U.S. at UC San Diego and NY, he moved to Russia. It was the early 1990s and Russia was going through the collapse of the Soviet Union. Thor built a soft drink and beer business. That he was so successful during such a tumultuous time in the country's history led people to conclude he had ties to the Russian mafia.Unclear if there was any truth to those rumors.
In 2002, Thor sold his soft drink and beer company to Heineken for $100 million and moved back to Iceland.
Soon thereafter, he and his father bought a 46% stake in Landsbanki, Iceland's second-largest bank.
Thor borrowed liberally against his equity in the bank.
In 2007, he put together a $6.5 billion leveraged buyout of the generic drug company Actavis. It was the peak of the credit bubble and banks were falling over themselves to lend him money. Deutsche Bank wanted to finance all $5.4 billion of Actavis' debt.
Losing A Fortune
Unfortunately for Thor, the global financial crisis hit right about then and the credit bubble burst.
Deutsche wanted Thor to put more cash into the deal. Thor borrowed $230 million from his own bank to make it happen. The last of that cash fell into his hands on September 30, 2008.
On Friday, October 3, 2008, Olafur Ragnar Grímsson, Iceland's president, was in a panic. Iceland was about to go under in the growing global financial crisis. The government had already seized one of Iceland's top banks and now Landsbanki was showing signs of trouble. Grímsson called Thor in London and told him to come home immediately.
Within the next 72 hours, Iceland's government had seized Thor's bank, Landsbanki. By the end of the week, Iceland was practically bankrupt. Its currency was worthless. Its stock exchange was shut down. Thousands of people lost their jobs and their savings. Thor was blamed for the economic disaster and the job and savings losses.
On top of all of that, Actavis, the drug company Thor bought right before the financial crisis, was imploding as well. All the drugs manufactured at a New Jersey plant had to be recalled. The CEO quit and sued Thor. Thor sued him back. Had Actavis been solvent when Iceland went under, Thor would have been forced to give up his stake. As it was, the banks worked with him as they had a lot to lose if Actavis went under too.
Thor was once revered as an economic visionary whose bank "guaranteed" high interest rates. With the collapse of Landsbanki, Thor was suddenly one of the most hated men in Iceland. His creditors were furious. His companies owed $10 billion and he'd personally guaranteed $1 billion of the debt.
His net worth, once a robust $3.5 billion, was now in the negative.
Thor, in addition to the Landsbanki and Actavis mess, was stuck with $350 million of his father's debts that he had personally guaranteed. His creditors were reluctant to sell assets for a fraction of their value. Thor was determined not to go bankrupt like his great-grandfather and father. So, in July 2010, 100 lawyers, consultants, bankers and restructuring experts representing all of Thor's creditors gathered in London. Their plan was to restructure his debts. Thor agreed not to borrow any money until he'd paid off the $1 billion he owed. With a deal in place, the banks repossessed one of his houses in Reykjavik and a summer cottage in Thingvellir. He was ordered to sell his yacht, private plane, and Ferrari. That only added up to about $15 million. Thor's creditors were also to get any dividends from his remaining holdings, which included Actavis, including the bulk of the proceeds if it was sold.
The Comeback Kid
In 2011, Siggi Olafsson, the former CEO of Actavis who was then working at Watson Pharmaceuticals, called Thor. Olafsson and his boss wanted to explore a merger with Actavis. In October 2012, Watson purchased Actavis for nearly $6 billion. Deutsche got $5.4 billion in cash, what it had put into the deal five years earlier. Thor's creditors got the first installment of $230 million. In the purchase, Thor gave up the right to whatever cash he was entitled to and instead took 4.3 million shares in Actavis. Those shares were eventually worth about $700 million, allowing him to pay off the rest of his debt to Icelandic creditors in 2014.
By the middle of 2014, he had repaid everything. Today he's back to billionaire status, with a net worth of $2.2 billion.
Björgólfur Thor Björgólfsson managed to avoid the fate of his great-grandfather, grandfather, and father. He landed on his feet and broke the cycle of family bankruptcies.
Today, Thor and his wife, filmmaker Kristin Olafsdottir own a number of homes including a $15.5 million mansion in Notting Hill, a $63 million London mansion, and an Italian-style villa in Reykjavik.
The lesson? You might be down, but you're never out!