Baugur’s stake in frozen food retailer Iceland is expected to generate “considerable interest” as the market gears up for a fire sale of the Icelandic investment vehicle’s UK assets, one analyst told just-food.

It was announced this morning (4 January) that Baugur has applied to enter the moratorium process in Reykjavik.

With debts totalling around GBP1bn (US$1.45bn), the company was forced to seek protection from its creditors after talks with its principal lender, Landsbanki, collapsed.

“The board of the company unanimously resolved to take this action following yesterday’s decision by Landsbanki to discontinue discussions regarding a potential restructuring of the group,” Baugur said in a statement.

The news has led to speculation that the group will be forced to sell its interests in the UK high street in order to pay off its lenders.

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“How the banks will take control of the assets remains murky but a sale is expected,” Pali International analyst Nick Bubb told just-food.

“Iceland is the best part of the empire. Given its sales figures it is likely to attract a lot of interest, not just from private equity but also from trade buyers,” Bubb predicted.

According to the latest TNS Worldpanel grocery market share figures, released yesterday, Iceland increased its sales in the 12 weeks ending 25 January by 14% thanks to a strong Christmas performance.

However, Bubb said, there could be less interest in Baugur’s non-food portfolio. “They picked a winner in Iceland, but they also picked a lot of losers in non-food,” he said.

Baugur holds a 14% stake in Iceland.