// Arcadia refuses to offer any more concessions regarding pension funds & equity stakes for landlords
// This plunges its CVA into uncertainty, as pension stakeholders remain unconvinced
// Landlords are also reportedly seeking more of an equity stake than what is on offer in the CVA
Arcadia Group’s CVA now hangs in the balance amid reports that it refuses to offer any more concessions regarding its pension funds and equity stakes for landlords.
Earlier this week, Sir Philip Green offered to provide £185 million in additional funds from property assets to help reduce reduce his retail empire’s pension deficit as part of a bid to win approval for its CVA.
This includes security over Arcadia’s flagship Topshop Oxford Street store, which would allow the property to be sold to shore up the pension deficit if a CVA is not enough to replenish Arcadia’s coffers.
Lady Tina Green – wife of Sir Philip and a major shareholder of Arcadia – is already set to inject £50 million of equity into the business, on top of £50 million she has already loaned, if the CVA is approved.
However, Arcadia’s CVA proposals also includes a reduction of contributions to the pension deficit – from £50 million to £25 million.
With a pension debt reportedly around £565 million and the Pension Regulator opposing the its proposals, Arcadia is reportedly digging in its heels and not offering any more concessions, according to Retail Week.
Sources speaking to the magazine said pension stakeholders were unconvinced by the proposals, while Arcadia insists pensioners would be unaffected if the CVA was voted through.
Meanwhile, landlords are reportedly seeking a larger equity stake in Arcadia than what has been offered in the CVA proposals, in exchange for lower rent deals and the ability to exit under-performing stores.
However, an Arcadia source told Retail Week that stakeholders should be “realistic in terms of where this group is, the financial performance of the group, the headwinds it’s facing and the fact it does need to reset its cost base in an effective way”.
Arcadia directors will meet creditors – which includes The Pensions Regulator, the Pension Protection Fund and landlords – on June 5 to seek approval for its CVA proposals.
The CVA will only go ahead if at least 75 per cent of creditors vote in favour of it.