A flurry of speculation surrounded the future ownership of Baugur’s retail interests as Drapers went to press, with Sir Philip Green, private equity bidders and various management teams vying to safeguard many high street stores.
Saj Shah, chief executive of Jane Norman and Jane Shepherdson, chief executive of Whistles, were among the management teams attempting to safeguard their businesses this week.
Both were understood to be looking independently for buyers for their chains, while Sir Philip Green and several private equity firms thought to include Alchemy, TPG and Permira continued talks with the Icelandic government about buying Baugur’s debt.
Jane Norman and Whistles are among the businesses with significant stakes tied up with Icelandic-linked shareholders. Baugur holds 39.5% of Jane Norman and Icelandic bank Kaupthing has 32% with the management holding about 20%.
Some 65.7% of Whistles is thought to be owned by Baugur and Icelandic bank Glitnir.
Whistles management are believed to hold about 20% of the shares. As Drapers went to press both the Kaupthing and Glitnir stakes were understood to be among the Icelandic assets frozen by the UK government.
Rumours that management at House of Fraser and Mosaic Fashions were looking for cash to buy stakes held by Baugur and Icelandic banks were denied by sources close to Baugur.
One source said: “At this moment Baugur is solvent so there is no immediate issue. Shareholders have pre-emptive rights so if any stake came up for sale the remaining shareholders including the management team would get first refusal to buy it. Stakes won’t fall into the wrong hands.”
Mosaic Fashions chief executive Derek Lovelock told Drapers: “The business has got sufficient funding in place. We are able to pay our bills as they fall due in the medium term. What we need to do at the moment is to secure long-term funding in order to secure the business going forward and we are prepared to deal with all parties to protect the future of our brands and employees.”
Lovelock added: I’ve known Philip for many years and worked closely with Jon Moulton [Alchemy] in my role as chairman of Jacques Vert and I have enormous respect for both of them and I’d be happy to work with either of them in the future. Throughout this process we continue to work closely with our colleagues at Baugur.”
It is understood that some businesses which banked with Kaupthing and Landsbanki are not as fortunate and are facing shorter-term funding and working capital facility issues, after the UK Treasury froze Icelandic assets meaning they could not draw down cash.
As Drapers went to press there was no suggestion that any Baugur-linked business had failed to pay creditors and it is understood the UK Treasury will ensure UK businesses can get access to enough cash from the banks to continue trading.
Separately HoF chairman Don McCarthy declined to comment on the Baugur situation but stressed to suppliers and employees that the department store group was an “independent business to Baugur” with a strong management team and good strategy in place. He said that the business remained unaffected by the current issues in Iceland.
If Green does pick up Baugur’s fashion businesses it would give him the second largest womenswear market share after Marks & Spencer. A source close to Green said he was likely to be largely supportive of existing management teams pointing out that when Green bought Arcadia he let the Rubicon buyout of Warehouse and Principles continue.
The source said: “Some brands would tick the investment box and fit well into the Arcadia portfolio, some he’d sell on at a profit and others are more likely to remain directly managed by existing management teams.”
Staking a claim: who owns what:
Jane Norman: Baugur 39.5%; Kaupthing 32%; remaining shares management and others
Whistles: Baugur 49.5%; Glitnir 16.2%; remaining shares management and others
All Saints: Undisclosed but Baugur owns 35%
Mosaic Fashions: Baugur 49%; Kaupthing 20%; remaining shares management and others
Matthew Williamson: TSM Capital 22%; Baugur 26.6%; the remaining shares are held by management
House of Fraser: Baugur 35%; Don McCarthy 19.4%; TBH Trading (Tom Hunter) 11.1%; Kevin Stanford 10%; Glitnir 13.9%; Bank of Scotland 5.4%; Stefan Cassar 2.8%; remaining shares management and others.