* Baugur applies for creditor protection
* Landsbanki seeks to put Baugur UK unit into administration
* Philip Green seen as suitor for some Baugur assets
* Alchemy confirms interest in some Baugur assets
(Adds Landsbanki statement)
By James Davey
LONDON, Feb 4 Baugur, the Icelandic group which
stormed onto the global financial stage by snatching stakes in
high profile British retailers, has applied for court protection
from creditors after restructuring talks with lenders failed.
The main lender, Landsbanki, said separately it had applied
to put Baugur's UK arm into administration, fuelling speculation
its interests in companies ranging from toy store Hamleys and
supermarket chain Iceland to department stores group House of
Fraser might be sold at knock-down prices.
British retail entrepreneur Philip Green has previously said
he would be interested in some of Baugur's businesses, which
also include fashion retailers Jane Norman and Whistles, while
private equity firm Alchemy told Reuters on Wednesday that it
was interested in some of the assets. [ID:nL4359517]
Baugur's aggressive expansion earlier this decade symbolised
Iceland's rapid economic growth, but the tiny north Atlantic
island was swept up in the global credit crisis last year, which
brought down banks like Landsbanki and its internet arm Icesave.
"This morning Baugur ... (has) applied to the District Court
in Reykjavik to enter into the moratorium process. This action
has been taken in order to protect the group's assets as well as
the interests of all creditors," Baugur, which has stakes in
companies employing about 50,000 people, said in a statement.
"The board of the company unanimously resolved to take this
action following yesterday's decision by Landsbanki to
discontinue discussions regarding a potential restructuring of
If granted in a court hearing on Friday, the moratorium is
expected to give Baugur three weeks of protection from
creditors, though this can be extended. A supervisor would be
appointed by the court to negotiate with creditors.
Baugur, with over 1 billion pounds ($1.4 billion) of debt,
had wanted to reach a deal with its lenders to avoid a break-up.
It had been in talks with Landsbanki, Glitnir and Kaupthing,
now partially owned by the Icelandic government, about a new
Landsbanki said the talks had not produced acceptable plans
and it had filed a petition to appoint PricewaterhouseCoopers as
administrators to Baugur's UK arm, BG Holding ehf.
Landsbanki said the move did not affect the trading of the
UK unit's investments and some of the companies involved, like
House of Fraser, issued statements to confirm this.
However, analysts said the move was likely to lead to the
sale of the investments, which also include stakes in department
stores group Debenhams (DEB.L) and fashion group French
"One option is that they (the shareholdings) will revert [to
the banks], the other is that they will be sold off to generate
cash, which will then go back into the business for the benefit
of creditors," said Altium Securities analyst David Stoddart.
Baugur Chairman Jon Asgeir Johannesson said seeking the
moratorium was the only way for the group to protect the
interests of its companies and creditors.
"I'm sure that Philip Green is dancing a war dance in his
living room, because now he will become a large owner of our
companies for virtually nothing," he told Icelandic news website
"Landsbanki didn't give us any other options," he added.
Green, the billionaire owner of Bhs and the Arcadia fashion
group who tried and failed to buy Baugur's debt last year in a
bid to gain control of its retail assets, declined to comment.
Baugur, whose interests also include a 49 percent stake in
Mosaic Fashions, which owns chains such as Oasis, Principles,
Karen Millen and Warehouse, was delisted from the Iceland stock
exchange in 2003 after it was bought by the Mundur holding
company, whose owners included Baugur's management.
Nick Hood, partner at insolvency experts Begbies Traynor,
said Baugur's move to seek court protection could be viewed as a
positive for the businesses concerned.
"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 to pick up
its stakes," he said.
(Additional reporting by Omar R Valdimarsson, Simon Meads and
Mark Potter, editing by Will Waterman and Elaine Hardcastle)