The founder of Baugur yesterday admitted he would lose control of the retail group that spans the House of Fraser department store chain and the Hamleys toy retailer if a planned deal with UK entrepreneur Sir Philip Green goes ahead.

Sir Philip made a dramatic intervention into the Icelandic crisis on Friday, flying to Reykjavik to negotiate with government ministers over buying Baugur’s debt held by failed Icelandic banks.

The debt is believed to have a combined face value of about £2bn.

In a television interview yesterday, Jón Ásgeir Jóhannesson, chairman and founder of Baugur, said a deal with Sir Philip – even at 'fire sale prices' – would be the right thing for the government and employees in Baugur, although he acknowledged that Sir Philip would gain power over the group and could force a restructuring.

Financial Times, Daily Telegraph