Property firms fight for better terms in Arcadia CVA

2016
Arcadia CVA
// Property giants form alliance to demand improved deal in Arcadia Group’s CVA
// The syndicate includes British Land and Hammerson
// Comes after Sir Philip Green pledged £100m investment for Arcadia

Some of the biggest property owners in the UK are reportedly joining forces in order to get themselves a better deal out of Arcadia Group’s impending CVA.

According to Sky News, British Land, Hammerson and four other firms are slated to appoint advisers to negotiate and demand better terms out of the widely-speculated restructuring scheme for Sir Philip Green’s retail empire.

Sources speaking to Sky News said independent advisory firm PJT Partners was the favourite to be selected to represent the alliance of six property owners.

The other property owners reportedly part of the alliance include Aberdeen Standard Investments, M&G Investments, Sovereign and Aviva.

The news comes after Green made a pledge to invest £100 million into Arcadia, should the CVA be approved.

Landlords have also already been offered an equity stake in Arcadia – with varying reports suggesting between 10 per cent to 20 per cent – in return for endorsing the CVA.

However, Sky News said some landlords want a larger stake.

Earlier this week, Arcadia was guaranteed support from HSBC for bank security over deposits worth millions.

Arcadia also proposed to halve the annual contributions it makes to its pensions scheme, from the £50 million down to £25 million.

The Pensions Regulator had reportedly “pushed back hard” on this proposal, due to how Green handled the BHS pension deficit scandal in 2017 – when he was forced to plug up to £363 million into the scheme of thousands of former employees.

In response, Green reportedly offered to give the pension funds security over Topshop Oxford Street, which has a lease that is said to be worth as much as £600 million.

Signs that Arcadia was looking to restructure first emerged earlier this year when it hired Deloitte to carry out a review of the business, followed by property advisers GCW for representation during discussions with landlords across its store estate.

Arcadia also reportedly drew up a list of stores it wanted to close down across the UK and Ireland, and appointed two restructuring specialists to its board of directors.

The future of Arcadia’s international stores also remain uncertain, and US private equity firm Leonard Green and Partners recently sold its 25 per cent stake in Topshop & Topman back to Arcadia for an undisclosed sum.

Arcadia has 571 stores and 388 concessions in its UK portfolio, and 1170 shops in 36 countries globally, many of which are department store concessions or franchises.

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