Icelandic investment group denies administration rumours

The Icelandic investment group that owns a host of retailers including Hamleys today denied it was looking at placing its UK business into administration.

The Icelandic investment group that owns a host of retailers including Hamleys today denied it was looking at placing its UK business into administration.

Baugur, which also owns high street retailers such as Karen Millen and Oasis, said it had not appointed advisers after reports suggested it had lined up BDO Stoy Hayward to look at a possible administration to speed up a rescue deal.

Gunnar Sigurdsson, Baugur's chief executive, said the group had "no plans to place our UK business in administration" and continued to monitor the situation in Iceland.

Baugur has been hit hard by the Icelandic crisis, with substantial amounts of debt held with the country's failed banks.

Some of the Icelandic banks nationalised last week are co-investors in Baugur, such as Glitnir, and their collapse last week has sparked fears over the retail group and its portfolio of UK high street giants.

Billionaire Topshop owner Philip Green is working on a deal to buy the group's debt in a move which could secure the firm's future and see the retail tycoon significantly tighten his grip on the UK high street.

Green flew to Reykjavik last Friday to meet bank chiefs and government ministers.

But it is believed that he may now face competition from opportunistic venture capital firms and banks keen to snap up the debt for a discount.

Baugur said it could give no update on the negotiations, which are now being led by Icelandic ministers.

Mr Sigurdsson said in a statement: "We continue to monitor the situation in Iceland, where possible maintain a dialogue with the banks and manage and plan our business accordingly."

If Green were to succeed in buying the debt, he would effectively gain control of some of the retailers owned by Baugur.

Baugur's founder, Jon Asgeir Johannesson, admitted in a television interview on Sunday that he would lose control of the group if Green bought the debt, saying "the person that owns the debt controls the company".

Green already owns the Arcadia Group, which comprises Bhs, Topshop, Topman, Burton, Miss Selfridge, Wallis, Evans and Dorothy Perkins.

Baugur's retail portfolio also includes a substantial stake in House of Fraser and shares in listed companies such as Debenhams, Moss Bros, French Connection and Woolworths.

Freddie George, retail analyst at Seymour Pierce said Green would become the second largest clothes retailer after Marks & Spencer if he were to pull off the deal.

"The acquisition of Baugur would be a great deal for Sir Philip Green" he said.

"It would significantly increase the stable of brands under his control. There would also be significant synergies from combining the two groups. Green would, we believe, likely combine House of Fraser with Bhs."

It is rumoured that Green is looking to accept 30% to 40% of the debt in Baugur, which ranges from £1bn (€1.3bn) to £2bn (€2.6bn).

But Mr George said the deal had only a "50:50 chance of success", with the need for approval from the UK and Icelandic authorities and potential interest from other retailers and rival bidders for the debt.

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