Chief insists Fraser group won't feel Iceland chill

A SENIOR figure at House of Fraser has insisted that the problems in Iceland will not affect it or Jenners.

There has been growing speculation that Icelandic investment giant Baugur is set to be hit by the collapse of Iceland's economy – with a knock-on impact on all of its UK retail operations.

But House of Fraser (HoF), in which Baugur has a 30 per cent stake, said the troubles will not impact it and customers should not expect changes at either its Princes Street store or Jenners.

The company insists that even if Topshop boss Sir Philip Green does buy up debt in Baugur, he will not assume control of HoF, which is a private company.

Don McCarthy, chairman at House of Fraser, said: "As the economic crisis in Iceland deepens, the speculation continues to rise on the likely impact on Baugur and its future.

"From time to time this speculation has enveloped House of Fraser.

"I felt that it was again important to clarify the independence of House of Fraser from these issues and to emphasise that they have no impact on the strength of its business, its operations or its trading performance."

He said that "there is no doubt" that Baugur is facing a difficult period, as it has been "unwillingly" drawn into the Icelandic banking crisis and the repercussions between the governments of Iceland and the UK.

Mr McCarthy said: "While we remain positive that the situation will be resolved, it is important to understand our distance from these events.

"Our funding is supplied through a group of international banks, led by HBoS, and with whom we have a strong relationship, and we have repaid and/or cancelled over £110 million of the debt as a result of the financial strength of the company and its ability to generate strong cash flows.



"To our employees and partners, I want to assure you of the strength of our management team, the strategy we have established and our confidence in delivering continued development through this tough period."

His comments came as Baugur, which also owns high street retailers such as Hamleys, Karen Millen and Oasis, said it had not appointed advisers after reports suggested it had lined up BDO Stoy Hayward to look at a possible administration to speed up a rescue deal.

Gunnar Sigurdsson, Baugur's chief executive, said the group had "no plans to place our UK business in administration" and continued to monitor the situation in Iceland.

Billionaire Topshop owner Sir Philip Green is working on a deal to buy the group's debt in a move which could secure the firm's future and see the retail tycoon significantly tighten his grip on the UK high street.