Baugur creditor moves on assets

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Baugur’s main creditor has moved to take control of its strongest assets, pre-empting an attempt by the failed Icelandic group’s executives in Reykjavik to secure a stay of execution.

PwC – for Landsbanki, which is owed £1bn by Baugur – was appointed fixed charge receiver over the group’s stakes in the Iceland supermarket chain, House of Fraser department stores, Hamleys toy shop and Aurum jewellery business.

“Not a single UK company has been put into administration as a result of this action,” said Landsbanki, emphasising a separate petition to put the Icelandic Baugur holding company into administration “does not effect the status or performance of the operating companies”.

A Treasury official signalled displeasure at the way in which the UK authorities were not informed that Landsbanki had precipitated the collapse of Baugur. “We should be kept in the loop; we are major creditors of Landsbanki,” he said. “We are just annoyed.”

Baugur had attempted to stymie the process by filing for protection from its creditors in Reykjavik. But with PwC’s successful grab for the best parts of the group, a moratorium in Iceland would only delay a transfer of shares in other companies to Landsbanki.

Retailers in Baugur’s portfolio spent yesterday trying to reassure staff, suppliers and the wider world that they were not threatened by the moves to place Baugur into administration.

Stakes in the four companies secured by PwC yesterday are the strongest in a mixed bag of retailers within the Baugur portfolio. Other companies within Baugur – such as the Mosaic stable of brands – have little or no equity and are set for a restructuring under different Icelandic banks.

Mosaic, the most vulnerable part of Baugur’s portfolio, includes retailers such as Karen Millen and Principles and is in urgent discussions with Kaupthing, its lender and shareholder, to secure funding.

Advisers to Mosaic are putting together alternative plans for the group’s survival. They have put Shoe Studio up for sale and have received expressions of interest for Principles, Mosaic’s women’s wear chain.

Kaupthing said in a creditors’ report yesterday that it was “determined to support the assets of the Bank where practicable ... and does not entertain any ‘fire sale’ bids”.

The nationalised Icelandic bank has sought an extension to a moratorium period to allow it greater time to restructure. The bank has been in talks about various restructuring options with creditors in a bid to preserve the value of the assets in the bank.

Kaupthing is being split into a new and an old bank as part of the restructuring. It has been considering creditor feedback and exploring such restructuring options as creditors, rather than Iceland’s government, recapitalising the new bank.

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