For sale: the British High Street

view gallery VIEW GALLERY

Icelandic group with major holdings in more than 20 chains faces meltdown

A large section of the British high street was in effect put up for sale yesterday as the Icelandic retail group Baugur filed for protection from its creditors.

The company, which has investments in about one in 10 high street retailers, including Hamleys toys, House of Fraser department stores and Iceland frozen food supermarkets, was forced to seek the Icelandic equivalent of bankruptcy protection after the troubled Landsbanki bank withdrew its funding and walked away from refinancing talks.

The move raises questions about the future of British stores backed by Baugur, such as the jewellery specialist Goldsmiths and the fashion chain Jane Norman, at a time when high street trade is dire, a vast number of shops are already empty and new financing is notoriously difficult to raise. The retail tycoon Sir Philip Green, and several private equity funds which have been circling Baugur's assets since October, are waiting in the wings to snap up some of the UK's most high-profile chains at a knockdown price, given that a number of controlling stakes are in effect now in the hands of administrators.

Sources say the most likely scenario in the short-term is that Baugur's shareholding in the high street chains will pass to its banks, but yesterday will be seen as the first official day of the great Baugur sale.

Sir Philip, who went to Iceland in October to discuss buying about £1bn of Baugur's debt, could pounce on some of Britain's biggest fashion chains. He said yesterday: "If someone offers us something, we'll look at it."

The billionaire said he was not interested in working with third parties to potentially buy any of the Baugur-backed brands. He explained: "We don't need any other parties. If we see something we like, we will buy it with our own chequebook. We have plenty of financing and do not need anyone's help."

He added: "We are looking at all sorts of things on a daily basis outside of Baugur."

Sir Philip declined to comment on any Baugur-backed retailers, but he is understood to have expressed interest in Principles, which is part of the Mosaic Fashions group. Baugur owns 49 per cent of Mosaic, which also operates the Karen Millen, Coast, Oasis and Warehouse chains.

Robert Clark, the senior partner at Retail Knowledge Bank, said: "I think [Sir Philip] would be interested in Mosaic collectively and all Baugur's fashion chains, such as All Saints and Jane Norman. I am sure he is rubbing his hands in delight."

Meanwhile, directors of some of Baugur's British retailers mounted a rearguard action against speculation that administrators might be forced to hold a fire sale of some chains, after private equity investors, including TPG and Alchemy Partners, expressed interest in buying some of Baugur's debt last autumn. They also insisted that the Icelandic company's filing for creditor protection would not affect their operations.

Derek Lovelock, the chief executive of Mosaic Fashions, said: "We have strong brands, the teams are focused on trading and our job is to secure the long-term future of Mosaic by working with [our main bank] Kaupthing. The board of Mosaic Fashions wishes to make it clear that the news of Baugur filing for a moratorium will in no way affect the future strength of the group or the operations of the business."

Baugur's holding in Mosaic is understood to be part of the credit protection programme it filed for in Iceland yesterday. Nick Bubb, a retail analyst at Pali International, said he believed Mosaic would be broken up, adding: "It is a fashion retailer in a tough sector. It had problems with working capital and stock before Christmas."

Overall, he believes that Mosaic's chains will ultimately be owned by private equity funds, other retailers or Sir Philip Green.

Don McCarthy, the chairman of House of Fraser, said: "We can only continue to emphasise that the difficulties that Baugur faces do not affect House of Fraser's trading or banking position. It is business as usual."

Baugur's problems came to a head on Tuesday night, when Landsbanki walked away from talks about refinancing the investment group, leaving Baugur with little option but to file for creditor protection in Iceland. In a separate filing yesterday, Landsbanki applied for Baugur's UK arm, BG Holdings, to be placed into administration with PricewaterhouseCoopers in Britain.

BG Holdings comprises a variety of stakes in the companies behind Iceland, House of Fraser, Hamleys and the jewellery chains Goldsmiths, Mappin & Webb and Watches of Switzerland, which are part of the Aurum Group. Sources said the creditor protection programme in the UK was likely to have the right of ownership of Baugur's stakes in British retailers.

Nick Hood, a partner at the restructuring specialist Begbies Traynor, said: "This could potentially be good news for Baugur's retail investments, which have been grappling with the uncertainty of having a significant but unstable shareholder, if more solid investors such as private equity houses are willing and able to pick up its stakes.

"However, in an environment where retailers face the triple pressures of the impact on margins from heavy discounting, the increased cost of stock due to sterling's weakness, and the challenge of persuading landlords to bring rents back to more realistic levels, the big question is whether buyers can be found for all of Baugur's fashion and retail investments which number 12 in the UK alone." Bryan Roberts, the global research director of Planet Retail, stressed that the potential demise of Baugur did not necessarily mean that its retail chains would be sold or stores would be forced to close. "At the moment there is no need to talk of store closures," said Mr Roberts. However, if Sir Philip or another retailer bought some of Baugur's chains, they might then close stores to avoid duplication of shops. Mr Roberts added: "Baugur is clearly not going to exist in its current form for much longer."

Chain reaction: Baugur's brands

House of Fraser

Shops: 62 Staff: 6,500 Turnover: £1.29 bn

Iceland

Shops: 667 Staff: 20,000 Turnover: £1.92 bn

Hamleys

Shops: 20 Staff: 394 Turnover: £49.3m

Whistles

Shops: 86Staff: 500 Turnover: £39m

Jane Norman

Shops: 192 Staff: 1,600 Turnover: £176.6m

Wyevale Garden Centres

Shops: 122 Staff: 4,100 Turnover: £256m

Other investments:

Matthew Williamson

All Saints

Odille

Karen Millen

Principles

Oasis

Warehouse

Coast

Shoe Studio

Mappin & Webb

Goldsmiths

Watches of Switzerland

Mydiamonds

French Connection

Debenhams

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before