THE owner of Mappin & Webb, Watches of Switzerland and Goldsmiths is poised to agree a debt for equity swap to halve its borrowings.

Aurum Holdings, chaired by House of Fraser director Don McCarthy, was putting the finishing touches to the deal late on Friday with Iceland’s Landsbanki to convert £42m of debt into equity.

The deal would cut its borrowings from £97m to about £55m. At the same time, the company is expected to put in place a new seven-year £10m mezzanine loan provided by Landsbanki, McCarthy and the company’s management team.

The restructuring talks began ahead of the expiry of a key loan facility in the next 12 months. After the refinancing, the management, headed by Justin Stead, will own 33% of the company.

The deal will provide greater working capital flexibility and pave the way for new store openings and online expansion. Mappin & Webb recently launched a new website and is due to open a shop in Manchester next year. Goldsmiths will also open one of Europe’s biggest jewellery stores at the Metro Centre in Gateshead in 2010.

Jewellers think that watches will again be the gift of choice this year, outstripping necklaces, bracelets, earrings and other jewellery.

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