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Iceland looks at options to reduce debts; SUPERMARKETS.

FROZEN foods chain Iceland is understood to be considering a sale and leaseback deal on its store portfolio in a move to reduce its spiralling debt.

The Deeside-based company, which is believed to have debts of about pounds 400m, is exploring ways of cutting costs.

A leaseback on its stores could raise up to pounds 250m, which would see it selling its stores in return for agreeing to pay rent to the new owner.

The sale and leaseback option could negate the need for Iceland to ask shareholders to soften its debt problem in the form of a rights issue, a move which could face difficulties because of continuing nervousness in the equity markets.

A number of leading retailers, including Marks & Spencer, Kingfisher and Tesco, have in the past successfully used sales and leaseback to raise capital.

The Deeside company's Christmas sales figures were disappointing, although a decision to abandon many of its "buy one get one free" offer steadied profit margins to some extent.

Its wholesale business, Booker, has continued to underpin profits.
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:Feb 11, 2002
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