One of the holding companies at the heart of the high street empire built by Baugur disclosed yesterday that it was talking to numerous bidders as a fire sale of the Icelandic investment group's British assets drew closer.

Mosaic Fashions, the group behind Oasis, Warehouse, Principles, Karen Millen, Coast and Odille, said that it was talking to parties about a deal to secure long-term financing, given the meltdown in Iceland's economy.

Alchemy, the private equity group owned by Jon Moulton, is one of the companies understood to have held talks with Mosaic and House of Fraser, one of Baugur's best-performing operations. Texas Pacific Group and Permira, the buyout firms, are also believed to be in negotiations with Baugur-backed companies in talks that could threaten Sir Philip Green's chances of adding to his high street collection, which ranges from Bhs and Topshop to Dorothy Perkins and Miss Selfridge.

One retail executive said: “Everybody is talking to everybody. It is an unprecedented situation.”

Mosaic is one part of Baugur most exposed to the chaos in Iceland, given that a significant amount of its bank facilities are held by the newly nationalised banks.

Derek Lovelock, Mosaic chief executive, insisted that the business did not need saving but had to consider its long-term position. He said: “The business has sufficient funding in place to meet all foreseeable obligations. Nobody could have foreseen the current situation in Iceland and the Board is examining all potential avenues to secure long-term funding to protect the future of its brands and employees.

“We continue to work closely with our colleagues at Baugur and have held talks with a number of parties, but would like to make clear that none of these has reached a conclusion. We are obviously encouraged, but not surprised by, the significant interest in our business, which has a strong management team and portfolio of brands.”

Sir Philip flew to Reykjavik last Friday to offer to buy Baugur's estimated £1.5 billion bank debt, which has been frozen by the Icelandic Government. It is widely believed that he is interested only in seizing control of Baugur's fashion interests, which also include Whistles, the womenswear chain run by Jane Shepherdson, Sir Philip's former lieutenant.

Buying the bank debt would put Sir Philip in pole position to take control of the companies, most likely through a debt-for-equity swap.

Sir Philip said yesterday that he welcomed the competition for Baugur because it meant that the chain was now safe from bankruptcy. “This is good because now the company won't go into administration,” he told The Times.

Baugur executives said that the bidding process was in chaos, given the turmoil in the Icelandic Government. They added that all potential bidders were confused over who actually owned the Baugur companies, with the debt and equity in each them so widely dispersed between various banks and investment vehicles. One said: “It's like looking into a pot of spaghetti.”

House of Fraser and Iceland, the frozen food supermarket chain managed by Malcolm Walker, are two of the prized assets in the Baugur portfolio.This week House of Fraser indicated its desire to escape the clutches of Sir Philip by reiterating that Baugur only held a minority 35 per cent stake in the business and that most of its bank loans were with non-Icelandic institutions.

One banker described the Iceland supermarket business as Baugur's “cash cow”, bearing in mind its renaissance under Mr Walker. Again, it is thought that Baugur owns only a minority stake in the business.

Mr Walker met Baugur executives on Tuesday night to discuss the chain's options.

Belgium has offered a lifeline to Kaupthing, Iceland's biggest bank. Yves Leterme, the Belgian Prime Minister, is going to Iceland on Friday to meet his counterpart Geir Haarde. Didier Reynders, the Belgian Finance Minister, said that his Government was ready to help to rescue the bank, where many Belgians have savings.

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