Baugur collapsed into administration yesterday after the stricken Icelandic investment group withdrew an attempt to block creditors in its local courts, in a move that could have major ramifications for some of the UK's biggest retailers.
The owner of Hamleys said it would not oppose the application by Landsbanki to put its UK arm, BG Holdings, into administration in the UK to "minimise any further jeopardy to theongoing operations of Baugur's portfolio companies".
The Icelandic bank's petition toappoint PricewaterhouseCoopers as administrator was granted at the High Court yesterday.
On behalf of Landsbanki, PwC now holds Baugur's 13.7 per cent stake in the frozen food retailer Iceland, 34.9 per cent of House of Fraser, 63.7 per cent of Hamleys and 37.8 per cent of Aurum Group, which runs Mappin & Webb, Watches of Switzerland, Goldsmiths and Mydiamond.
PwC's appointment will have noimmediate impact on the operations of the Baugur-backed retailers and not a single retailer has been placed into administration.
However, PwC has a legal duty to maximise the return it gets from Baugur UK's stakes, which could mean a relatively swift sale of the shareholding to suitors, such as to the retailtycoon Sir Philip Green or privateequity firms, although this will depend on the health of individual chains.Alternatively, PwC may hang on to the assets until more favourable conditions for raising finance or trading on the high street return.
Gunnar Sigurdsson, the chief executive of Baugur, said: "We are verydisappointed with Landsbanki's dec-ision as we believe that we had sound restructuring proposals to maximise the recovery and value for all stakeholders of the group."
A Landsbanki Resolution Committee spokesman dismissed the notion that a firesale of Baugur's assets was now likely, adding that its role was to "maximise the long-term value of those assets".
The bank said it does not intend to oppose Baugur's separate request, lodged in Iceland, for protection from creditors for its remaining businesses. Baugur's 49 per cent stake in Mosaic Fashions, the group behind Karen Millen, Coast, Oasis and Principles, is unaffected by PwC's appointment, though Mosaic is locked in talks with its bank, Kaupthing, to try to secure its future through a refinancing.