Leif the Lucky, a 10-foot-tall statue of a Viking armed with a sword and a rock guitar, cut a lonely figure in the lobby of Baugur’s former Bond Street headquarters last week.
The fifth-floor office was otherwise deserted. It had been that way since the collapse of the Icelandic investment group on Wednesday — empty, save for a small pile of well-thumbed copies of society magazines strewn on the floor and a large tank of tropical fish in the entrance hall.
It was in the former boardroom at the office that Jon Asgeir Johannesson, the founder of the Baugur empire, agreed to an exclusive interview with The Sunday Times just 24 hours after news of Baugur’s bankruptcy was confirmed in the Icelandic capital Reykjavik.
Johannesson had just flown into London’s Heathrow airport on a Virgin Atlantic jet from New York. He looked pale, tired and unshaven — far removed from the fearless young raider who carried out an extraordinary debt-fuelled raid on Britain’s high street, snapping up stakes in retailers including House of Fraser, Hamleys, Whistles, Coast and the frozen-food chain Iceland.
“I am still in a state of shock,” he said. “It all happened so quickly I haven’t realised what happened. But it has been a total disaster scenario. I’m sad. I spent 11 years building this up. But I guess this is life. It is what it is.”.
Johannesson, dressed in his trademark black, had presided over a Baugur empire that had stakes in businesses employing about 65,000 people across 3,800 stores and turning over £10 billion.
It was not without reason that Johannesson once joked that Sir Philip Green, owner of Topshop and BHS, should move over as king of the high street because the prince had arrived.
Most of Baugur’s brands, including House of Fraser and Iceland, have carried on unaffected, but the lion’s share of Johannesson’s personal fortune — estimated at £600m just two years ago — has been wiped out. And the accoutrements that came with such great wealth have all but gone.
His New York penthouse will be sold. His private jet and 50-metre Hessen yacht have new owners. He still has a Rolls-Royce Phantom back in Iceland, but only — he admitted wryly — because there isn’t much of a market for second-hand luxury cars in these chastened times.
“It’s nice to have these things, but you can definitely live without them,” he shrugged, sipping the first of the 10 cans of Diet Coke he consumes each day.
He gave the impression of a man at a crossroads between recrimination and frustration about the past and a fierce determination to build a new fortune.
“We definitely had too much on our plate. Not only the retail, but other things that were taking up our time. We will do it differently next time — it will be smaller, more focused.
“Many businesses we have in the UK are in better shape now than when we bought them — Booker, Iceland, House of Fraser, Hamleys,” Johannesson added.
“We made some mistakes. MK One \ was mismanaged from day one. We didn’t understand where its position was in the market.”
Baugur collapsed under its £1 billion of debts and its stakes have been reclaimed by the Icelandic banks that lent the company the money.
Speaking separately the following day, Gunnar Sigurdsson, Baugur’s UK chief executive, admitted that the group’s debt burden had been too heavy.
“Clearly, at the end of the day, the amount of leverage in the business was too much. A once-in-10-years recession we would have survived, but not a once-in-100-years recession.
“At some point it got a little bit out of control, but we had a great team and we did some really good things along the way.”
Beneath the admissions of culpability, it is not hard to see the steely and youthful defiance of Johannesson and Sigurdsson: that, somehow, it wasn’t their fault and if only the banks or the Icelandic government had behaved differently none of this would have happened.
Both vented their frustration against the banks for rejecting their plans to keep the business intact.
Johannesson said: “We thought the businesses should all be kept together under the same umbrella, but now there are bits of pieces in this bank . . . bits of pieces in another bank. There will be value dilution. Big time. It is difficult for banks to be shareholders in companies.”
And Sigurdsson reflected: “It would have been much better for us to manage those assets than the banks. It didn’t need to happen and that’s the way it goes — we just have to accept it and move on.”
In his home country Johannesson has been the target of protests following the meltdown in Iceland’s economy.
He stands accused of helping to bring down the country’s banking system.
“There is huge turmoil in Iceland and there is a lot of finger-pointing games about who is to blame,” he said.
However, he insists that the politicians have their own case to answer.
“We had a world crisis. I pointed out many times in Iceland that they should consider joining the euro and that having a small currency like the krona would get us into trouble.
“The collapse of the banks in Iceland probably wouldn’t have happened if we had the euro,” he said.
Sigurdsson was even more defiant. “The criticism of us has gone way too far. Generally our philosophy was good. You can’t forget the good things — Big Food Group \ was virtually bust when we bought it — now it is employing 35,000 people and doing great things,” he said.
Johannesson defends the group’s strategy of buying minority stakes in listed retail businesses, such as Debenhams, Moss Bros and Woolworths — many of which backfired spectacularly after their share prices collapsed.
“Nobody could imagine all the retail stocks would get so hammered. We had ideas about all those businesses and we thought if they go up we can sell and if they get cheap we can do things with them,” Johannesson said.
He also claimed to have no regrets about his infamous one-page management style. “It is still a very good idea — my background was with a discount retailer in Iceland — and it was all about simplifying everything. If it is good to do that at any time, it’s now.”
Now Johannesson is planning the future with Sigurdsson and is trying to line up fresh backers to buy different retail businesses.
This time round it will be a smaller, more focused operation, with less debt.
Together with the chairman of House of Fraser, Don McCarthy, they have registered a new company at Companies House called Tecamol and they have taken on a new office above the Watches of Switzerland store on Oxford Street, but it is still early days — perhaps too early since the wreckage of their last business.
“We are not just going to lie down and do nothing,” said Johannesson.
Will he get support from the business community? “You will never know until you try it . . . but people have come forward and said they will back us. We will have the guts to try.
“People were always very sceptical about us — especially at the beginning, but it will not be the last you see of us.”
Leif the Viking will join Johannesson in his new office. “He will stay close to me,” he said smiling. He must be praying his mascot will provide him with better luck this time.
TEKIŠ AF VEF The Sunday Times http://business.timesonline.co.uk/tol/business/
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