Bidders circle Mosaic's fashion chain Principles

The womenswear retailer Principles is on the verge of being sold after its debt-laden parent company revealed it had received a number of approaches for the 361-store chain.

The revelation by Mosaic Fashions, which is 49 per cent owned by the collapsed Icelandic investor Baugur, came as it said its main bank Kaupthing had agreed to temporarily waive its rights on selected financial covenants and interest payments on the group's debts until the next unspecified payment date.

Mosaic, which also operates retail brands such as Karen Millen, Oasis and Coast, said it would consider the approaches for Principles "within the scope of the restructuring discussions". Sir Philip Green, the retail tycoon, is said to be one of the interested parties in Principles, which targets professional women in their thirties. Mosaic also confirmed it had begun a sale process for its Shoe Studio Group.

In addition to critical refinancing talks, Mosaic is feeling the pressure from tough trading on the high street and a squeeze on its working capital, as credit insurers reduced cover for its suppliers when the Icelandic banking crisis erupted last autumn.

However, Mosaic said: "There is no intention to split the group further." Speculation had been mounting that other Mosaic chains may be offloaded after the UK arm of Baugur, BG Holdings, fell into administration last week. Mosaic is not part of the administration process being handled by PricewaterhouseCoopers that relates to Baugur UK's stakes in the frozen food retailer Iceland, the department store House of Fraser, the toy specialist Hamleys and Aurum Holdings, the group behind the Mappin & Webb, Goldsmiths, Watches of Switzerland and

Mosaic, which has debts of nearly £400m, has been locked in refinancing talks with Kaupthing, which owns a 20 per cent stake in the fashion group. It is looking to negotiate an additional working capital facility with Kaupthing.