Swathe of fashion chains to hit the market next year
Published 28/11/2016 | 02:30
Fashion mainstays including Coast, Oasis and Warehouse are being put up for sale as part of an effort to recover money for creditors of failed Icelandic bank Kaupthing.
Administrators who control the bank are looking to sell off the portfolio of fashion retailers, four sources familiar with the matter said.
They are also looking at options for the sister company that operates the Karen Millen fashion chain which shares the same owners.
The companies employ hundreds of Irish staff at more than 60 shops and concessions and are mainstays of main streets and shopping centres across the country.
An examinership in 2014 shrank the size of the Irish operations, but also cut debt and rents.
In the UK, the chains employ thousands of people.
An internal reorganisation last year of Aurora Fashion, a previous holding company, included splitting out the debts of the chains, meaning they could now be sold separately. The Karen Millen arm was previously split out but not sold.
The most recent accounts for Aurora Fashion show Irish sales were £32m (€37m) of the group's £410m (€483m) in the year to the end of February 2015.
The entire portfolio ended up under the control of Kaupthing's administrators after the bank was nationalised during Iceland's 2008-2011 financial crisis.
The Icelandic bank's domestic operations were spun into a new bank known as Arion Banki, non-Icelandic assets remained with the now defunct Kaupthing.
Kaupthing itself ended up with the brands in 2009 after loans it had advanced to Icelandic investment firm Baugur turned sour. Baugur had used the debt to buy Mosaic Fashions - a holding company for its fashion chains.
Reykjavik-based Kaupthing filed for bankruptcy in 2008. Its former executives were later charged with fraud in Iceland.
The bank did not respond to requests for comment, while the retailers were not immediately available for comment.
The bank was never a natural owner of the fashion brands, so a sale has always been inevitable.
It is understood that Kaupthing invited banks to pitch late last month for a mandate to auction the retail assets early next year, the sources said. It could face a tough sell.
Valuations of clothing retailers have come under pressure, with Britain's fashion market suffering its steepest decline in sales since 2009 as consumers increasingly spend their money elsewhere, according to industry data published last month.
A sale of Oasis, Warehouse and Coast could be worth less than £100m (€118m), two of the sources told Reuters. One said it might draw interest from private equity funds.
However, the funds may find it hard to submit competitive offers due to the poor outlook for British retailers, who have been further challenged by the fall in the pound since Britain's vote in June to leave the European Union.
But that makes Irish profits relatively more valuable.
(Additional reporting by Reuters)