Founder of Iceland vows to fight off hedge funds

Sir Malcolm says he has rejected ‘frequent approaches’ for business he set up 52 years ago

THE founder of Iceland Foods has pledged to retain control as hedge funds circle the supermarket by snapping up its debt at a steep discount.

Sir Malcolm Walker insisted he has no plans to sell up despite claims that he had begun sounding out parties potentially interested in acquiring the business he set up 52 years ago.

He said he had rejected “frequent approaches” from suitors for the frozen foods specialist.

Sir Malcolm, 76, was responding to claims he had begun “quietly marketing” Iceland, which is facing the prospect of a showdown with opportunistic debt investors. They are said to have bought the supermarket’s debt for as little as 67p in the pound earlier this year. Such strategies are typically used to position for a potential debtfor-equity swap and seize of control if borrowing becomes unaffordable.

Meanwhile, as Iceland grapples with £750m of debts, trade credit insurers including Allianz and Atradius have cut their exposure to the supermarket, which has more than 1,000 stores and employs 31,000.

Sir Malcolm and co-owner Tarsem Dhaliwal insisted that Iceland Foods is “trading incredibly well”.

They said: “In the current climate, customers have never needed affordable quality frozen food more.

“Iceland Foods is 52 years old this week and is a privately owned multigenerational family business. Our sons, Richard Walker and Paul Dhaliwal, hold executive positions and will take over from us in the future. We have no plans to sell the business, despite frequent approaches.” They continued: “Our 2025 bonds are trading in the mid-80s, which is positive given the current economic climate. The maturity is over two years away, we are paying a very low fixed interest rate, and when the time comes, we are supremely confident of our refinancing plans.

“Only a very small proportion of our suppliers have credit insurance. Credit insurers regularly review cover upwards and downwards for all retailers in the UK; therefore this is ‘business as usual’ for us. We have a collaborative and effective working relationship with all of our suppliers and they have reported no issues to us to date.”

Sir Malcolm set up his first Iceland shop in Oswestry, Shropshire, selling loose frozen food in 1970. He was forced out of the company in 2001 after the business merged with wholesaler Booker to form The Big Food Group. The Yorkshireman returned in 2005 with The Big Food Group close to bankruptcy before sealing a £1.5bn management buyout backed by coinvestors Brait, Lord Kirkham and The Landmark Group.

Sir Malcolm, knighted in 2017 for services to retailing entrepreneurship and charity, returned to helm the company in 2020, acquiring the business alongside Mr Dhaliwal.

The retailer is Britain’s ninth biggest grocer and has 2.3pc of the market, according to sector analysis by consultancy Kantar.

Iceland’s parent company posted a £41m pre-tax loss on £3.7bn of turnover, according to its most recently filed accounts for the year to March 25 2022.

Richard Walker, 42, the managing director, has become a more prominent face of the company since his father’s return to the business.

A vocal campaigner for political, environmental and social issues, he has appeared on shows such as the BBC’s Question Time and has been named as a Conservative parliamentary candidate.