Icelanders deny Beatties handover

Retail giant Baugur today denied it is in talks with the Icelandic government to hand over control of high street chains, including Beatties’ owner House of Fraser.

But the Icelandic-owned business has confirmed it is talking the country’s nationalised banks about possible restructuring of the company and its estimated £1 billion debt mountain.

Baugur has built up controlling stakes in a string of UK retail business in recent years, including House of Fraser - which owns the Beatties stores in Wolverhampton and Dudley - and Hamleys, as well as major shares in Goldsmiths jewellers, French Connection, Mosaic and Iceland food stores.

Along with the rest of the Icelandic economy, it has been hammered by the economic upheavals of the past 18 months. It was reported at the weekend that Baugur was in talks with the Reykjavik government and the nationalised banks that could lead to a deal in which they took a stake in the retailing giant in return for a share of the profits from its high street businesses in the UK.

This would help the Icelandic government gain valuable income to shore up the country’s shattered economy.

Baugur issued a statement denying it is in talks with the government.

“In the wake of the collapse of the Icelandic banking system, Baugur Group has been in talks with its relationship banks regarding the restructuring of the company with the aim of maximising the long-term value of its assets and dispel any uncertainty regarding the future.

“This action is directly linked to the efforts to secure the shareholders investments.

“Baugur would like to clarify that no discussions are taking place with regard to the acquisition of a stake in Baugur’s assets by the Icelandic Government.”

All three of Icelands biggest banks were nationalised by the government this autumn when they came close to collapse as a result of the worldwide credit crunch.

As a result, the Reykjavik government has a major role in the decisions they now take.

Baugur took control of House of Fraser in a £351 million deal in 2006, just months after Fraser bought up the 12-strong Beatties group in a takeover worth almost £70 million.

That resulted in the loss of local control at Beatties for the first time in its 130-year history, as well as seeing the closure of the group’s ailing branch in Corporation Street, Birmingham.

Baugur boss Jon Asgeir Johannesson immediately upset Black Country people by claiming that the Beatties name had “no resonance” with shoppers, and might disappear.

A campaign to keep the Beatties name means it still sits above the entrance to the Wolverhampton and Dudley stores, although it has been removed at the other nine stores in the former Beatties stable.