House of Fraser and high street fashion group Mosaic Fashions, both part-owned by troubled Icelandic investor Baugur, have both said they have sufficient funding to meet their obligations.
Their comments came as retail billionaire Sir Philip Green continued his dialogue with Baugur, Icelandic banks and the Icelandic government to acquire much of Baugur’s debt, estimated at more than £1 billion.
Some of the debt is held by major Icelandic banks, nationalised in the country’s banking crisis.
House of Fraser, 35 per cent owned by Baugur, said in a statement: “We would like to emphasise that House of Fraser has all the funding in place to operate successfully.
“We have minimal exposure to the tragedy that is happening in Iceland. However, should any of the debt or the minority shareholdings in House of Fraser be put up for sale, we will examine it on a case-by-case basis.”
Mosaic owns fashion chains Oasis, Principles, Karen Millen, Warehouse and Coast.
In a statement its chairman Derek Lovelock said Mosaic “does not require saving”.
“The business has sufficient funding in place to meet all foreseeable obligations ... the board is examining all potential avenues to secure long-term funding,” he said.
“We continue to work closely with our colleagues at Baugur and have held talks with a number of parties ... We are obviously encouraged, but not surprised by the significant interest in our business.”
Buying Baugur’s debt would give Sir Philip considerable influence over the investment group’s high street interests, which also include Jane Norman, Whistles, supermarket chain Iceland and iconic toy store Hamleys.
Baugur also owns stakes in UK retailers Debenhams and Woolworths.
Sir Philip reportedly faces competition for control of Baugur from private equity groups TPG, Permira and Alchemy.
“Until it’s not done, it means it can be done,” Sir Philip told Reuters.
“There’s a few issues being sorted out and we’ll see where we get to,” he said.
Meanwhile, supermarket giant Tesco is raising a £1 billion syndicated loan despite the tough lending conditions, bankers said yesterday.
Tesco is arranging the loan itself rather than appointing a group of mandated lead arrangers, but has appointed HSBC to act as a co-ordinator, the bankers told the Reuters news agency.
Tesco is trying to put a club of around 10 banks together to fund the loan and has gathered six or seven so far, they added.
Tesco has declined to comment.
The loan is Tesco’s second this year. The company took a £2.4 billion 364-day revolving credit in June this year, which matures in June 2009.
Companies are trying to refinance short-term loans to avoid questions from auditors and ratings agencies, but the task is being complicated by the loan market’s lack of liquidity.
Tesco’s chief executive Sir Terry Leahy said last month, as Britain’s biggest retailer unveiled a 10 per cent rise in first-half profits, that it was important to get banks to lend at sensible prices.
“It is important that we get banks back to doing their job, which is to provide liquidity for the real economy and lending at sensible prices,” he said.