Banks Plot Sale Of Food Giant Bakkavor

By Mark Kleinman, City Editor

One of Britain's biggest suppliers of supermarket ready-meals is heading for a shake-up of its ownership as part of the unwinding of the legacy of the Icelandic banking crash.

Sky News has learnt that Bakkavor, which is a major supplier to Marks & Spencer, Tesco, Waitrose and other major grocery chains, is drafting in bankers to sell stakes potentially amounting to nearly half of the company's share capital.

The move follows a restructuring of Bakkavor's borrowings, including a debt-for-equity swap, last year.

Although little-known among British consumers, Bakkavor is a significant player in the UK food industry, employing more than 16,000 people here.

Insiders said on Monday that Barclays was close to being appointed to find buyers for the 25% of Bakkavor which is owned by Arion Banki.

Other Icelandic institutions, including the Pension Fund of Commerce and the Gildi Pension Fund, which between them hold about 12% of the company, may also decide to participate in the share sale.

Barclays would be hired by the company at the request of the selling shareholders, they added.

The Gudmundsson brothers, Agust and Lydur, who founded Bakkavor a quarter of a century ago do not intend to sell any of their 39% shareholding, according to another source.

Bakkavor became a big player in the UK through its takeover of Geest in 2005, a deal which reflected the rapacious appetite among Icelandic companies to expand internationally.

The enormous loans made by Iceland's banks enabled those companies to embark on a debt-fuelled spending spree but triggered the meltdown of the country's economy when the financial crisis hit in 2008.

The Gudmundssons were the biggest shareholders in Kaupthing, one of the Icelandic banks that collapsed, through their investment vehicle Exista.

Bakkavor, which made around £115m in profit last year, will report half-year results later this week, an obligation placed on the company because it has listed bonds.

Its international customers include Burger King, PizzaExpress, Pret a Manger and Starbucks.

A Bakkavor spokesman declined to comment on Monday.

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