Baugur defends its leverage policy

LONDON (Reuters) - Baugur's bosses were quoted as saying the Icelandic investor had adopted a "sensible" leverage policy despite debts of 1 billion pounds.

Baugur's UK Chairman Jon Asgeir Johannesson told the Financial Times on Saturday the company's way of operating was no different to others.

"We did it in the same way that many other people in other countries were doing," he was quoted as saying.

"Leveraged buy-outs were not created in Iceland and we put a sensible leverage on our businesses and we leveraged our equity against that in the same way people were doing abroad."

Baugur's Chief Executive Gunnar Sigurdsson also said its capitalisation had been sensible, with assets of 1.5 billion pounds.

"Obviously, we've been affected by falling asset value as everybody else," he was quoted as saying.

When Iceland's banks failed recently, the government ended up owning Baugur's debt after seizing Kaupthing, Landsbanki and Glitnir.

Johannesson and Sigurdsson told the paper the company could survive the turmoil and could service its debt.

They also called on the Icelandic government not to enter a "fire sale of good assets," adding Baugur could use its British stores to funnel foreign currency to help pay off an IMF loan, the paper added.