Investors in Mosaic Fashions are understood to be split over the best way to extract value from the Baugur-backed fashion conglomerate which owns Oasis, Principles, Warehouse and Karen Millen.
Speculation mounted this week that the recent collapse in high street trading had accelerated plans for a break-up of Mosaic, which has been hit hard by the collapse of the Icelandic banking system.
Icelandic bank Kaupthing has a stake in Mosaic and also provides its day-to-day lending facilities.
Sources in the market told Drapers that the slump in high street fashion sales meant shareholders, which include Baugur, Kaupthing and the Mosaic management team, were looking more urgently for ways to “maximise value” from the group. However, there are understood to be conflicting ideas over the best way forward for the business, with some investors opposed to a break-up.
Several sources told Drapers that a break-up scenario was likely to involve a spin-off of Mosaic’s high street chains – Oasis, Warehouse and Principles – into a standalone group.
Karen Millen and Coast could also be spun off or sold off individually or as a niche fashion retail group. The future of footwear concession company Shoe Studio Group, which has struggled to compete, remains unclear.
Other shareholders balked at the idea because of the cost and complexity of splitting the businesses, which share distribution and financial services that would not be easy to unravel.
One source said: “There would be a lot of work and cost attached to a break-up and all it would do is throw huge costs back onto each of the businesses.”
But another source close to the situation said: “The question is what would give the best value? It would be looked at like the break-up of Sears. It could be that some brands are sold off individually or in bundles. Mosaic’s current EBITDA is simply not strong enough.”
Sources told Drapers that corporate advisory firm Deloitte was also assessing the future shape of Mosaic Fashions on behalf of the Icelandic government, which hired Deloitte to advise it on all of Kaupthing’s UK assets.
But the sources stressed that Deloitte’s involvement was not “special treatment” or “an emergency measure” and that Mosaic was having ongoing discussions with Baugur and Kaupthing to work out how the business will be financed going forward.
Sources close to Mosaic stressed it had plenty of cash to meet all of its obligations to suppliers and landlords. Baugur was unavailable for comment as Drapers went to press.