Wikipedia

Baugur Group

Baugur Group(/ˈbaʊɡər/;Icelandic:[ˈpœyːɣʏr̥]) was anIcelandicinvestment company.The group began as a supermarket and general retail company in Iceland, before diversifying to own a number of businesses at its peak, primarily in theUnited Kingdom.

Baugur Group hf
Company typePrivate
IndustryRetailer, Real estate
FoundedReykjavík,Iceland(1998)
FateAdministration
Headquarters
Reykjavík
,
Iceland
Key people
Jón Ásgeir Jóhannesson,CEO
ProductsRetailer, Investment company
Websitewww.baugur.is

Baugur was heavily affected by theIcelandic financial crisisthat began in 2008, and applied for bankruptcy protection in February 2009. Its largest creditorLandsbankiapplied to place Baugur's UK arm, BG Holdings, intoadministrationthat month.[1]The group filed for bankruptcy in March 2009.[2]

History

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In 1989, the Baugur Group was started by the opening of a single 'Bónus' supermarket inReykjavíkbyJón Ásgeir Jóhannessonand his father,Jóhannes Jónsson.The company grew quickly and within three years was operating several supermarkets in Iceland. In 1992,Hagkaup,the leading domestic retailer, acquired 50% of shares in Bonus. In 1993, they merged and formed a joint purchasing company named Baugur.

Hagkaupwas established over 50 years ago and, as a retailing pioneer, opened both supermarkets and department stores in Iceland. Hagkaup and Bonus merged as Baugur in 1998 andJón Ásgeir Jóhannessonbecame the company's President and CEO. Baugur was listed onIceland Stock Exchangethe same year.

In 1999, Baugur signed franchise agreements with theArcadia GroupandDebenhamsfor Scandinavia and today Hagar, (formerly Baugur-Iceland) runs severalTopshopand Miss Selfridge stores in Iceland and Sweden as well as three Debenhams stores.

Baugur changes to Baugur Group

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In 2002, proposals were approved concerning a change in the name of Baugur hf. to Baugur Group hf. and changes to the company's organizational structure.

Baugur hf. was divided into three independent profit centres: Baugur-Iceland, Bonus Stores Inc., and Baugur-ID. Baugur hf. changed its name to Baugur Group hf. and became a holding company.

Baugur Group delisted from ICEX

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In May 2003, a redemption offer worth 10.85 Icelandickrónur(£0.09) was made by Mundur, for the outstanding stock—Mundur holding company is backed by Gaumur,KB Banki,an Icelandic investment bank; and two private investors—and in July 2003, Baugur Group was delisted from theIceland Stock Exchange.

The year 2003 was a milestone in Baugur Group's foreign operations. At the beginning of the year, Baugur Group held shares in a few listed companies in Britain, whereas, at the end of the year, it was the most internationally extensive Icelandic company.

Briefly, it can be said that Baugur Group's investment activities in Britain can be split into two categories. On one hand, Baugur Group continued to invest in listed companies that are regarded to have better futures, either because their current management is in the process of improving the company's operation, or because new shareholders are expected to step in to instigate improvement. Among the companies, which Baugur Group has invested in on these premises are theBig Food Group,House of Fraser,andSomerfield.

On the other hand, Baugur Group has formed a strategy to take part in management takeovers. These companies control strongbrandnames and are considered to have substantial opportunities for growth, show a net profit, and management has shown and proven its ability to succeed. During the year 2003, Baugur Group acquired three such companies:Hamleys,Oasis, andJulian Graves.

In May 2004, Baugur Group, along with other investors, acquired the majority in the British jewellery chainGoldsmiths,in cooperation with the company's management, for the amount of ISK 14.4 billion. Goldsmiths, which was established inNewcastle upon Tynein the year 1778, operates 165 jewellery stores in Britain and is the second largest in the country in its sector.

In June 2004, the founders ofKaren Millenagreed to sell the business to the Oasis Group (controlled by Baugur Group) in a deal valued at £120 million, creating a leading womenswear retailer with four strong brands—Oasis, Coast, Karen Millen, and Whistles; creating a group with over £350 million in sales in 550 stores.

Oasis is aimed at independent, fashion-conscious 18- to 30-year-old women and operates from 281 outlets across 14 countries, including the Republic of Ireland, the UK and France; Coast is a destination brand for women's special occasion clothes with 135 outlets; Karen Millen has a niche position away from the mass market, bordering on the designer brands; and Whistles has more-grown-up styling and quirkier taste than the rest of the high street. Later, the Oasis Group changed its name to Mosaic, listed on theICEX.

Accounting irregularities

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In 2002 Baugur's headquarters were the subject of a police raid.[3]In July 2005 company foundersJón Ásgeir JóhannessonandJóhannes Jónssonwere charged on 40 counts[citation needed]including tax and accounting irregularities,fraudandembezzlement.[4]Jón Ásgeir Jóhannesson has accused the then prime minister,Davíð Oddssonof orchestrating a vendetta against him.[citation needed]The case became known in Icelandic as the 'Baugsmálið' ('Baugur case').

On 3 May 2007, Jón Ásgeir was found guilty on a single charge of a breach of book-keeping rules, with the conviction being upheld on appeal on 6 June 2008.[3][5]Jón Ásgeir was given a 3-monthsuspended prison sentence.It also left his position as chairman uncertain under Icelandic law because the conviction meant that he could not serve on any company board for 3 years.[3]As a consequence of this, and the fact that much of Baugur's portfolio was now based in the UK, in July 2008 Baugur considered relocating to the UK, where Jón Ásgeir could keep his board position.[4][6]

Demise and collapse

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See also:2008–11 Icelandic financial crisis

It emerged in October 2008 thatBDO Stoy Haywardwas advising Baugur on restructuring and thatPhilip Green,the owner ofBhsand theArcadia Grouphad travelled to Iceland for negotiations regarding him making an investment in Baugur, amid reports the group was on the brink of collapse[7][8]

On 4 February 2009, Baugur applied for protection from its creditors after restructuring negotiations withLandsbankibroke down. The bank also applied for Baugur's UK arm to be put intoadministration.[9]

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In December 2002Gaumur Holdingacquired a 30.97% stake in Baugur Group.[10]

Luxembourg-registered Gaumur Holding was originallyCompagnie Financiere pour l'Atlantique du Nord.The company was registered on 22 June 1998. In March 2000 changed its name toGaumur Holding.[11]

Official records show that Gaumur Group had three shareholders:[12]

  • Starbook International Limited(P.O. Box 3186 Road Town, Tortola, British Virgin Islands)
  • Waverton Group Limited(P.O. Box 3186 Road Town, Tortola, British Virgin Islands)
  • Birefield Holdings Limited(P.O. Box 3186 Road Town, Tortola, British Virgin Islands)

In 2005 Danish media reported that behind Starbook, Waverton and Birefield isShapburg Limited(registered in the same mailbox 3186) andQuenon Investments Limited(registered in the same mailbox 3186). It was discovered that:

  • Both companies owned a stake in Baugur Group.[11]
  • Both companies owned a stake in the Luxembourg-registeredCompagnie Financiere Scandinave.A month after incorporation it was renamed theScandinavian Holdingand laterMeidur S.A.(later Exista).[11]
  • Both companies owned a stake inAlrosa Financein Luxembourg. Another shareholder was Russian state-owned diamond companyALROSA.[11]
  • Shapburg Limited owned a stake inAlfa Finance Holdings.Another shareholder wasAlfa-Bankof Russia.[11]

Icelandic businessmenBjörgólfur Thor Björgólfsson,Björgólfur GuðmundssonandMagnús Þorsteinssonall came to London from Saint Petersburg, Russia where they did business in the beverage sector together.[11]

Former assets

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Board of directors

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  • Hans Christian Hustad
  • Hreinn Loftsson (Chairman)
  • Gudrún Pétursdóttir (Alternate Board Member)
  • Kristín Jóhannesdóttir
  • Þórður Bogason (Secretary of the Board)
  • Ingibjörg Stefanía Pálmadóttir
  • Jóhannes Jónsson
  • Einar Thór Sverrisson - Alternate Board Member

References

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  1. ^Thompson, James (7 February 2009)."Baugur admits defeat as UK arm falls into administration".The Independent.Retrieved31 December2014.
  2. ^Hall, James (11 March 2009)."Baugur files for bankruptcy".The Daily Telegraph.Retrieved31 December2014.
  3. ^abcBaugur Boss loses court appeal,International Herald Tribune,2008-06-07
  4. ^abBaugur investigates switch to UK,BBC News,2008-07-04
  5. ^Baugur CEO and former assistant director found guilty,Iceland Review,2007-05-04, archived fromthe originalon 2012-02-17,retrieved2009-02-04
  6. ^Baugur Plans to Relocate to U.K. After Iceland Exit,Bloomberg,2008-07-04
  7. ^Wood, Zoe (2008-10-12),"Philip Green steps in to save Baugur",The Guardian,London,retrieved2010-04-26
  8. ^Fletcher, Richard (2008-10-14),"Baugur in talks with restructuring experts",The Daily Telegraph,London,retrieved2010-04-26
  9. ^"Hamleys investor seeks protection".BBC News.2009-02-04.Archivedfrom the original on 5 February 2009.Retrieved2009-02-04.
  10. ^"Fjárfestingarfélagid Gaumur ehf. discloses holding in Baugur Group hf".Archived fromthe originalon 2011-07-27.Retrieved2010-04-07.
  11. ^C - N° 205 / 25 mars 1999.Government of Luxembourg
  12. ^abcdefgBaugur completes restructuring as a pure Retail investor and builds new investment pool,Baugur, 2008-04-08,archivedfrom the original on 10 February 2009,retrieved2008-12-27
  13. ^abcWood, Zoe (2008-10-12),"From hero to size zero: the Baugur crisis",The Guardian,London,retrieved2008-12-27
  14. ^Baugur sells Booker stake as part of focus on retail,Retail Week,2008-06-24,archivedfrom the original on 9 February 2009,retrieved2008-12-27
  15. ^abcdFinch, Julia (2008-10-17),"House of Fraser says it would buy Baugur stake",The Guardian,London,retrieved2008-12-27
  16. ^"Jane Norman Is Latest High Street Casualty".Sky News.27 June 2011.
  17. ^Mesure, Susie (2007-07-30)."Baugur buys Jane Norman for £117m".The Independent.London. Archived fromthe originalon 9 February 2009.Retrieved2008-12-27.
  18. ^Holland & Barrett buys Julian Graves,Retail Week,2008-09-17,retrieved2008-12-27
  19. ^Hall, James (2008-07-04),"Baugur to relocate to the UK with Jon Asgeir Johannesson at the helm",The Daily Telegraph,London,retrieved2008-12-27
  20. ^Icelandic company Árdegi hf buys Baugur Group shares in Merlin,Baugur, 2007-06-28,archivedfrom the original on 10 February 2009,retrieved2008-12-27
  21. ^Lynam, Joe (2008-05-02),Invoice worries as MK One is sold,BBC News,archivedfrom the original on May 5, 2008,retrieved2008-12-27
  22. ^Kollewe, Julia (2008-11-13),"Philip Green pays £6.7m for Baugur's stake in Moss Bros",The Guardian,London,archivedfrom the original on 22 January 2009,retrieved2008-12-27
  23. ^"Mosaic firms into administration".BBC News. 2009-03-02.Archivedfrom the original on 3 March 2009.Retrieved2009-03-02.
  24. ^Co-op buys Somerfield for £1.57bn,BBC News,2008-07-16,archivedfrom the original on 22 January 2009,retrieved2008-12-27
  25. ^Baugur pulls out of Somerfield bidding,The Scotsman,2005-07-04,archivedfrom the original on 9 February 2009,retrieved2008-12-27
  26. ^Thompson, James (2008-08-19),"Baugur: the iceman cometh...",The Independent,London,archivedfrom the original on 3 December 2008,retrieved2008-12-27
  27. ^Woolworths shares are suspended,BBC News,2008-11-26,archivedfrom the original on 25 December 2008,retrieved2008-12-27
  28. ^Brown pledges Woolworths support,BBC News,2008-11-27,archivedfrom the original on 18 December 2008,retrieved2008-12-27
  29. ^Shepherdson completes Whistles MBI,Drapers,2008-01-28,retrieved2008-12-27
  30. ^Whittard sold to private equity,BBC News,2008-12-23,archivedfrom the original on 26 December 2008,retrieved2008-12-27
  31. ^Brakes closes two Woodward depots,The Grocer,2008-11-22,retrieved2008-12-27
  32. ^Walstead Investments buys UK printing business Wyndeham,AltAssets, 2008-12-09,retrieved2008-12-27[permanent dead link‍]
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