A kick in the balls

Baugur Group HF, the Icelandic owner of stakes in U.K. retailers from Hamleys Plc to Iceland Foods Ltd., asked for protection from creditors after talks with Landsbanki Islands Hf broke down.

Baugur and its subsidiaries applied in a Reykjavik court to enter a “moratorium process” to protect its assets and “all creditors,” according to a statement today, after Landsbanki decided to end talks aimed at restructuring the company.

From Bloomberg

Jon Asgeir Johannesson describes today’s moratorium actions of Landsbankinn against Baugur as a kick in the balls to visir.is. This means that Britons will get some of the best companies owned by Icelanders for next to nothing.

“I am sure Philip Green is dancing in his living room now that he will become owner of a large part of our businesses for a cut-down price”. 

A couple of bloggers have pointed to the eerie fact that David Oddson and Jon Asgeir Johannesson are finally facing the music in the same week.


2 Responses to “A kick in the balls”

  1. 1 Vilhjalm A. February 4, 2009 at 4:15 pm

    The act of seeking protection from creditors doesn’t necessarily mean that Baugur is completely broke. It could be the equivalent of American “Chapter 11”, a form of bankruptcy where the debtor asks for protection while reorganizing its debt and providing a plan for repayment (often the creditors take a share of the company instead of money).
    Often companies seek Chapter 11 because they don’t have enough cash available to pay their debts.
    If Baugur’s outstanding debts are 1.4 billion pounds, maybe the company is worth 1, 1.5, or 2 billion. You won’t know until the full reorganization plan is submitted in 9 months or so.
    JAJ claims that Greene will get the company for nothing and Iceland will suffer – that’s rubbish. Bankruptcy proceeding take a long time and the creditors get to say how and when assets are sold. Courts often allow a long time — maybe up to two years — for sale of assets to ensure that creditors get their full value.
    Besides, if Baugur only has net assets of 0 or 1 billion, that is not much in comparison to the rest of Iceland’s debt, and that will go to the English anyways under the “terrorist act”.
    JAJ was trying to squeeze more money out of Iceland. Fortunately the government said f*** you.

  2. 2 Vilhjalm A. February 5, 2009 at 5:45 am

    I see from the comments on Eyjan that people are really pissed off at JAJ. Really really pissed. Maybe homicidal. Apparently he has bulletproof glass in his house in Reykjavik. He will need it if he ever comes back here.
    Someone there mentioned that the total amount of damage he caused to Iceland (ie bank debt) was about 1000 billion. What is that, maybe $8 billion? It could be even more.
    It’s not clear (to me, at least) how the outstanding debt (that Green offered to buy) is 1.5 pounds, but the losses would be 7-8 billion euros or dollars. Perhaps more of the debt created by JAJ shows up in other companies.

    Anyways, it is a great achievement of sorts to lose that much money in so short a time. And he was supposedly buying “safe” retail investments, not speculating in strange derivatives.

    I doubt Iceland will get very much money for the Baugur holdings. The British economy as everyone knows has gone into the toilet and discretionary spending in luxury and fashion shops will be the first thing to be cut back.

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