Britain and the Netherlands are putting together a revised proposal on the repayment of $5.7 billion owed by Iceland to the two countries following the collapse of the Icesave online bank.
A source with knowledge of the talks said the main change under discussion is a floating interest rate, replacing the 5.6 percent rate under the previous deal.
The source, who requested anonymity because the proposal had not been completed, said that there was currently no time frame to take the deal to Iceland.
Elias Jon Gudjonsson, a spokesman for Finance Minister Steingrimur J. Sigfusson, said the Icelandic government had not received a new offer, but had got a message that a proposal would be made within days.
The potential breakthrough follows talks held at the Iceland Embassy in London by officials from all three countries earlier this week, led by attorney Lee Buchheit, of the New York-based office of Cleary Gottlieb Steen & Hamilton.
They were thrashing out terms of a deal to return funds spent by Britain and the Netherlands to compensate their citizens' depositors in Icesave, an Internet bank that collapsed with its parent Landsbanki in October 2008.
Iceland's government has been keen to reach a new deal to avoid a planned national referendum on the repayment deal, scheduled to take place March 6.
Iceland's president vetoed the so-called Icesave bill and ordered the legislation to be put to voters following widespread support for a national petition against the deal.
A "no" vote at the referendum could lead to a block on much-needed financial aid promised to Iceland by the International Monetary Fund and Nordic countries.
Opponents of the deal do not object to settling debts with Britain and the Netherlands, but accuse Iceland's creditors of wanting repayments to be made faster than the stricken nation can manage.
It is estimated the repayments will cost Iceland the equivalent of $60,000 per family.
The InDefence grass-roots organization, which drafted the petition, has previously accused the British and Dutch governments of being "engaged in economic warfare against Iceland."
The British Treasury office said Friday that it was working with its counterpart in the Netherlands on the issue.
The Dutch Finance Ministry could not immediately be reached for comment.
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