The deal with Arion will see key executives keeping a slice of the company worth around ISK 330 million (EUR 2.07 million). They will not pay anything for the shares and will not need to pay tax on them either, according to the contract with the bank.

Having made the deal, Arion will now be able to sell on the remaining 97.5 percent of the company.

Hagar runs many of Iceland’s biggest shops, including the Bónus and Hagkaup supermarkets.

Vísir.is reports that Arion Banki has not released any details about which Hagar bosses will be given shares; but it is known that current president of the company Finnur Árnason is among them.

The latest reports value Hagar at around ISK 13 billion (EUR 81.35 million). The stake being gifted to its former execs is worth around ISK 330 million, and is therefore around 2.5 percent of the business.

Jonsson and his son Jon Asgeir Johannesson founded Bonus, which would later merge with Hagkaup to become Hagar and then become closely associated with Johannesson’s Baugur Group.

Following bankruptcy, Hagar came into the ownership of Arion Bank which took the surprise decision to keep Johannes Jonsson on the board and guarantee him the right to purchase ten percent of Hagar shares when the company re-lists on the stock exchange. Both decisions have now been reversed, however.

Arion took its decision because Jonsson is the founder of Bonus and knows the company extremely well – so well, in fact, that his usual nickname in the Icelandic media is Johannes from Bonus.

The terms of Jonsson’s departure are that he has a 12-month termination contract, a pay-off of ISK 90 million (USD 742,000) and may not go into competition against Hagar for at least 18 months.

Johannes Jonsson has also been permitted to purchase several of Hagar’s smaller shops at the going market rate. Those shops are Bonus in the Faroe Islands (Hagar’s only overseas property), and Top Shop, Zara and All Saints in Iceland. Despite an ongoing fight with cancer and severe business problems, Johannes has remained a regular and optimistic voice in the Icelandic media since the economic crisis.

The survey compared prices in the Bonus supermarket chain both now, in August 2009 and in January 2008. The basket of food has only increased by ISK 10 (USD 0.08) since last August – but this masks the fact that prices are still way up on the survey before that.

In January 2008, before the collapse of the krona, some products were over 70 percent cheaper than they are today and most were more than ten percent cheaper.

Today the price of minced beef was exactly the same as last August, whole milk has decreased in price by three percent, AB milk is also cheaper and cod liver oil is seven percent more expensive. Arial washing liquid is three percent cheaper – although the currency has strengthened by roughly 10 percent in that time.

The news is welcomed in Iceland, despite the fact that food is undeniably more expensive than before the banking collapse. However, for visitors spending foreign currency, food (and everything else) is probably still cheaper than before, due to the reduced value of the Icelandic krona.

The stores are going to be called Best Price. According to Vidskiptabladid, a search is underway to find suitable retail space for the shops.

The paper states that the idea is to build the chain in the same manner as Iceland’s Bonus chain was started in 1989 by Jon Asgeir and his father, Johannes Jonsson. Bonus’s humble beginnings were the starting point for the precipitous rise and fall of the Baugur Group which would end up buying much of the UK high street on credit and going bankrupt along with the Icelandic banks doling out the cash.

Bonus is still bt far Iceland’s biggest chain of supermarkets and is still closely linked to its founders even after the parent company was taken over and sold on by Arion Bank. At the beginning Bonus did not accept credit cards and paid all its suppliers up front and has since grown to its dominant position by offering consistently low prices.

Best Price Foods ltd has been a registered UK company since last June, but was originally called Bonus Foods ltd. According to the registry of UK businesses, the CEO of Best Price is Hordur Logi Hafsteinsson; a former Baugur employee who has previously worked with Jon Asgeir Johannesson and Gunnar Sigurdsson on projects in London.

The company is registered at 413 Oxford Street at the same address as JMS Partners ltd, which is a company owned by Jon Asgeir, Gunnar Sigurdsson and Donald McCarthy, president of House of Fraser department stores.

The District Court has upheld a Competition Authority ruling from December 2008 that Hagar should pay a fine of ISK 315 million (USD 2.45 million) for abusing its leading market position. The fine is the biggest such punishment ever handed out in Iceland.

Hagar runs large Icelandic retail chains including Bonus supermarkets.

Hagar’s national share of the grocery market is over 50 percent; and over 60 percent in the Reykjavik region. The company broke competition laws by selling certain products at below cost price – especially by selling dairy products far below their true cost in its Bonus stores in response to a competitor’s newly lowered prices on a wide variety of products in 2005, Visir.is reports.

The owners of Bonus put the whole chain into a loss-making position purely to starve out its rivals before putting prices up again, which the Competition Authority felt was against the law.

Kaupass (Kronan supermarkets) and Samkaup (Samkaup, Netto and Kasko supermarkets) hoped to increase their market positions during the 2005 ‘price war’, but Hagar’s tactics ensured that Bonus remained on top.

Arion Banki recently re-floated Hagar on the stock market after taking it over due to the bankruptcy of its former mother company.

Hagar is Iceland’s biggest retail chain, including household names like Bonus, Debenhams, Hagkaup, Top Shop and 10-11 in Iceland. Arion Banki took over 95.7 percent of the company when it took control of owner 1998 ehf, which was itself owned by Jon Asgeir Johannesson and family, best known for their Baugur business which is now bankrupt.

Current Hagar investors will be allowed to increase their stake to 15 percent – including ten percent for Johannes Jonsson, Jon Asgeir’s father. Jonsson will remain chairman of the board.

The remaining 85 percent of the business will be traded on the stock exchange and Arion Banki intends to entirely sell its share. The bank believes the move serves both its own purposes and the public’s, allowing more people to buy a share of the important company.

Current president Finnur Arnasson will remain in his role and be one of the old owners allowed to invest. The remaining four seats on the new board will go to new investors.

Arion Banki defended leaving Johannes Jonsson in charge of the company’s board; saying that he is one of the company’s founders and has largely done a good job over the last two decades or more, leading the bank to believe he should remain a major investor.

The Danish People’s Party’s (DF) stance on immigration has been further strengthened with the arrangement which will see foreigners deemed ‘anti-social’ paid DKK 100,000 to depart the country. The proposal is part of the DF’s budget negotiations with the government and has been agreed upon by both parties according to The Copenhagen Post.

Under the scheme, the handout for repatriation would take over from a similar scheme currently offering up to DKK 28,256 to refugees and those in the country for family reunification purposes to go home. Half of the current bonus is normally paid to departing refugees 12 months after their return home and upon expiry of their Danish residency rights. The new legislation means a foreigner returning home will be paid the DKK 100,000 bonus immediately upon their return and formal renouncing of residency rights.

The term ‘anti-social’ has not yet been defined by the DF or the government other than to say that the programme is aimed towards those foreigners that ‘can’t or won’t integrate’.

Pia Kjaersgaard, the DF party leader, said the agreement would save substantial sums of money in costs which are currently absorbed by regional and local councils. “Society will save a lot on an immense number of charges and problems. We already know that there are problems with nursing homes and have been problems with hospitals and health charges,” Kjaersgaard stated.

Local councils will be provided access to a pool of some DKK 20 million which can be used as motivation for foreign returnees and will receive a full refund on any repatriation costs as opposed to the existing 75 percent payment.

The DF has also managed to secure additional measures to tackle immigration, including a DKK 10 million budget for new scanners at Danish border control points that can improve passport control through accessing Interpol databases for fraudulent documents.

Danish opposition parties are unimpressed by the new agreement which they claim sends a clear message to foreigners that they are not welcome in Denmark.

Due to open at 11 yesterday morning in Kopavogur, Kostur was unable to open for three hours due to technical difficulties with price tags and the computer system. Once customers were allowed inside, they were still unable to purchase products straight away. However, the shop is now fully operational and will be open seven-days-a-week. The shop is located near the Smaralind shopping centre in Kopavogur, a town a few minutes’ drive from Reykjavik.

Sullenberger is known as the former friend and business partner of Jon Asgeir Johannesson who turned star witness in court cases against the former Baugur boss following their falling out.

Kostur is designed to give value conscious Icelanders an alternative to Bonus, which is run by Jon Asgeir and family’s Hagar. The success of Kostur will depend on its ability to provide products at similarly low prices to Bonus – a feat low price competitors Kronan, Fjardarkaup, Netto and Kasko have struggled to achieve.

Hagar has also been in the news recently following Kaupthing’s acquisition of a 40 percent stake in partial payment for the company’s massive debt. The bank could still end up taking over the entire business if Johannesson and his partners cannot secure new finance. Click here to read about the story.

(Photo: RUV.is)

Hagar, which runs shops including Bonus, Hagkaup and 10-11, is one of the companies owned by the holdings company 1998. 1998 is owned by Jon Asgeir Johannesson and family. In 2006, the company took a roughly EUR 260 million loan from Kaupthing to buy Hagar from Baugur. At today’s exchange rate, the euro debt is around ISK 48 billion, Visir.is reports. The debt of 1998 was transferred over to New Kaupthing after the banking crisis because it is an Icelandic company with mainly domestic operations.

A management reorganisation is taking place at Hagar, including the parachuting in of two Kaupthing employees to 1998’s board.

Due to massive debts owed to the bank, it now looks likely that New Kaupthing will take a 40 percent stake in Hagar and a contract is apparently being written up that would confirm the change of ownership, as well as totally removing 1998 from the picture.

New Kaupthing is, for the time being, still a nationalised bank.

Hagar is owned by 1998 ehf. which is itself owned by Jon Asgeir Johannesson, the former Baugur boss and his family who are now struggling to keep control of Hagar. Johannes Jonsson is Jon Asgeir Johannesson’s father. According to DV, two Kaupthing staff members have now been put on the board of Hagar and the nationalised bank will take the company over if the refinancing is not successful. This means that a large swathe of the Icelandic high street would fall under indirect government control.

Hagar runs the Icelandic operations of: Hagkaup, Bonus, Bananar, Hysing, Adfong, Ferskar Kjotvorur, 10-11, Debenhams, Karen Millen, All Saints, Warehouse, TOPSHOP, Zara, Oasis, Dorothy Perkins, Coast, Evans, Utilif, Jane Norman and DAY, according to the company’s website.

Jonsson said the refinancing is going well, pointing to a contract between the company and Kaupthing to increase capital in the company as evidence. He would not be drawn on where the indebted business planned to source the extra capital from.