Top High Street names facing a rocky future
SOME of the high street’s most familiar names were facing an uncertain future last night after talks aimed at saving a major Icelandic investor collapsed.
Famous stores such as House of Fraser, Hamleys, Goldsmiths and Karen Millen could be sold off after the retail giant Baugur filed for protection from its creditors.
The Reykjavik-based investor, which has run up debts of £1billion, has applied to enter a “moratorium” process allowing it to stop paying creditors while negotiating with them.
Baugur – which has emerged as one of the most powerful forces in British retailing – ran into trouble when the collapse of the Icelandic banking sector last year wiped out the firm’s access to credit.
Unable to secure loans from banks, the group’s finances began to unravel.
It had been in talks with Iceland’s national bank Landsbanki about a restructuring package but those discussions have since broken down.
Baugur holds majority stakes in fashion chain Whistles and toy store Hamleys as well as minority stakes in a host of other famous names including House of Fraser, frozen food chain Iceland, jewellers Mappin & Webb, Watches of Switzerland and Goldsmiths and clothing stores All Saints, Karen Millen and Oasis.
Retail experts believe the company’s financial problems could lead to a fire-sale of its UK assets with large swathes of the British high street undergoing a change of ownership.
Last night a number of private equity firms were understood to be circling some of the vulnerable chains as the affected retailers insisted trading would continue as normal.
Sir Philip Green’s Arcadia retail group is also rumoured to be interested in acquiring some of the assets.
Baugur employs around 55,000 people in the UK but it is hoped any sales would not impact on the workforce.
The group said it had taken the action “in order to protect the group’s assets as well as the interests of all creditors”.
A Landsbanki spokesman said: “Our discussions with the Baugur Group did not produce any acceptable proposals, so we have taken steps to protect these valuable assets.
"We intend to work with management of the companies to maximise the long-term value for stakeholders.”
House of Fraser chairman Don McCarthy said: “The difficulties that Baugur faces do not affect House of Fraser’s trading or banking position. It is business as usual.”