Aurum claims it is unaffected by pending Baugur administration

Aurum Holdings, which owns Goldsmiths, Mappin & Webb, Watches of Switzerland and mydiamonds.com, has said that its business will not be affected by the looming administration of its largest shareholder, Icelandic private equity company Baugur. The retail group has also confirmed that it has appointed Ernst and Young to carry out a review of the business, as reported last week, which some industry insiders believe will lead to a sale of the group.

Aurum chairman Don McCarthy said: 'During these difficult times, it is important to clarify the independence of Aurum and to emphasise that Baugur is a shareholder and has no impact on the strength of the business, or its day-to-day operations. It is disappointing news, however we can only continue to stress that the difficulties that Baugur are facing do not affect Aurum's trading or banking position.'

Baugur applied to the District Court in Reykjavik to enter the moratorium process on Wednesday. It said that it has taken this action to “protect the group’s assets as well as the interests of all creditors” after talks with bank Landsbanki to restructure the group fell through.

Aurum has recently completed an internal review of its business and has now hired Ernst and Young to undertake an independent review. Aurum chief executive Justin Stead said that the company has “full support” from its shareholders and banking syndicate, which is led by HBOS and Landsbanki. Stead said: “They are pleased with our 2008 positive like-for-like trading performance along with the achievement and delivery of many key objectives, including reducing stock by £10m while vastly improving operating efficiencies across the entire business.”

Next month Aurum Holdings will release its festive trading statement and results for 2008. McCarthy said that he is pleased with Aurum’s performance last year. He said: “We have increased our market share in the watch and jewellery sector and this is a credit to Justin and the Aurum management team driving a robust and focused strategic plan.'

Aurum is the largest distributor in the UK for Rolex, Patek Philippe, Cartier, Breitling, Omega and TAG Heuer. Recently, it has opened new Mappin & Webb stores in London, Glasgow, Heathrow Terminal 5, a Watches of Switzerland shop in Edinburgh, and Goldsmiths outlets in Liverpool, Leicester, Bristol, Belfast and Westfield London.

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