Sir Philip Green promises £100m to help save Arcadia

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Green Arcadia
// Sir Philip Green pledges £100m investment for Arcadia
// Last-ditch push to secure landlord and creditor support for his retail empire’s imminent restructuring
// Arcadia’s board members met on Tuesday to debate the company’s options

Sir Philip Green has promised to invest £100 million into Arcadia Group in a last-ditch tactic to win over approval from landlords and creditors for a restructure of his retail empire.

The news comes after Arcadia board members held a crunch meeting on Tuesday to debate restructuring proposals in order to secure the longterm future of the company, which operates Topshop, Topman, Dorothy Perkins, Miss Selfridge, Evans, Wallis and Burton.

It’s thought that the meeting involved a discussion  n whether to proceed with or cancel the CVA, an insolvency procedure that would involve scores of store closures in Arcadia’s UK estate as well as rent reductions.

However, a CVA would only go ahead if board directors were confident it would have the approval from at least 75 per cent of landlords, pension trustees and other creditors.

Directors from Arcadia reportedly met on Tuesday to discuss final plans for the group’s restructuring. It is most likely that it will take the form of a company voluntary arrangement (CVA), which will require 75% of creditors to vote in its favour to be approved.

According to the Financial Times, Green pledged £100 million for Arcadia as a way to secure the approval required for the CVA to go ahead.

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

The deal extends existing terms with HSBC, and will see the bank act as guarantor in relation to letters of credit to suppliers, according to This is Money.

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

According to The Sunday Times, The Pensions Regulator had reportedly “pushed back hard” on Green’s attempts to lower contributions due to how he handled the BHS pension scandal.

In 2017, Green was forced to plug up to £363 million to the pension scheme of thousands of former BHS workers following months of discussions and controversy.

Arcadia had owned BHS for 15 years. It collapsed in 2016 under the ownership of Dominic Chappell, who had bought the chain from Green for £1 the year prior.

Arcadia’s pension scheme currently has thousands of members and is understood to currently have deficit of about £550 million on a conventional funding basis and £750 million on a full buyout basis.

With this in mind, Green reportedly offered to give the 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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1 COMMENT

  1. It would be interesting to look into whether Richard Caring has secretly been a shareholder of Arcadia considering the vast amount of cash the Green family paid in dividends to the company’s shareholders in 2005. Last time the Greens handed out millions in dividends to one of their company’s shareholders, Richard Caring was found to have secretly been one of them and to have been handed out £93m. Since they are best friends and Caring is closely associated to Green’s business (his clothing company ICD supply most of Green’s shops), I wouldn’t be surprised to discover Caring has been secretly holding a stake and paid out millions in dividends from Arcadia.

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