Jóhannes Jónsson leaves Hagar
Jóhannes Jónsson has resigned from the board of directors of Hagar hf. and is no longer involved with the company. Certain provisions in the agreement that Arion Bank made with Mr Jónsson last February concerning the management and sale of Hagar, including his option to buy 10% of the share capital of Hagar, have been annulled.
Mr Jónsson is to buy three specialist retailers from Hagar as well as Hagar’s share in a food retail business in the Faroe Islands.
Hagar is in the process of being sold by Arion Bank and the final details will be announced soon.
Arion Bank and Jóhannes Jónsson have reached an agreement over Hagar. The bank believes that the agreement represents a necessary step in moving the sales process forward and ensures the continued stability of Hagar.
Hagar group includes Bónus, Hagkaup, 10-11, Útilíf, Zara, Debenhams, Topshop, Coast, Evans, Dorothy Perkins, Oasis, Karen Millen, All Saints, Day and Warehouse. Hagar also owns the purchasing companies Aðföng, Hýsing, Bananar and Ferskar kjötvörur. Arion Bank acquired a 95.7% interest in Hagar when it took over the holding company 1998 in October 2009.
According to the agreement Mr Jónsson will acquire Hagar’s entire shareholding (50%) in the Faroese company SMS. SMS owns supermarkets in the Faroe Islands, which are unconnected to the business in Iceland and are Hagar’s only assets outside Iceland. Mr Jónsson will also be acquiring the specialist retailers Top Shop, Zara and All Saints because Arion Bank does not wish to sell them as part of the group on account of the connections between the owners of the franchises and Mr Jónsson’s family.
The purchase price of these assets is ISK 1,237.5 million, which is slightly higher than the book value in Hagar’s balance sheet and is a fair price in the opinion of the bank.
In addition to the waiving of Mr Jónsson’s options, the agreement contains strict conditions prohibiting Mr Jónsson and closely related parties from competing with Hagar in the 18 months following the signing of the agreement. A 12-month severance agreement has been made with Mr Jónsson. In addition he will receive a lump sum payment of ISK 90 million upon the settlement of his business with Arion Bank. Mr Jónsson will also buy at market value a car, an apartment and a summer cottage which he has had at his disposal.
Höskuldur H. Ólafsson, CEO of Arion Bank, says that bank believes that the changes contained in the agreement are necessary for the sale of Hagar. “Mr Jónsson’s knowledge of Hagar’s business has been helpful in getting the company through a difficult phase, but it is now time for others to come in and complete the sale. It is the Bank’s opinion that the interests of Mr Jónsson and the interests of the Bank are no longer compatible as Mr Jónsson has publicly stated that he intends to regain ownership of Hagar when it goes on public sale. It is therefore necessary that he steps down as chairman of the board to ensure that all potential bidders are on an equal footing. Mr Jónsson is waiving his option on 10% in the company and has agreed not to compete with Hagar for 18 months. The decision to sell the franchises was made since the licences for these business were not secured on account of personal links and so we could not justify selling them as part of the Hagar group. The 50% stake in SMS was sold because it is not linked to Hagar's activities in Iceland. These assets are being sold at a good price for Hagar. Following these changes, Hagar remains an attractive, solid business.”