// Arcadia Group’s proposed CVA clears major hurdle ahead of a crunch vote with creditors today
// Sir Philip Green agrees to give Arcadia Group’s pension scheme an additional £25m cash injection agreed with The Pensions Regulator
// This means Arcadia will now provide security for the scheme to the total value of £210m
// Pension Protection Fund has also agreed to vote in support of the CVA
Arcadia Group’s proposed CVA has cleared a major hurdle as Sir Philip Green gained the support of pension regulators after agreeing an additional £25 million for its pension fund.
The Topshop tycoon received the backing of both The Pensions Regulator and Pensions Protection Fund after proposing £310 million to help plug Arcadia’s pension scheme.
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This total is made up of a voluntary cash contribution of £100 million from Lady Tina Green, wife of Sir Philip and ultimate shareholder of Arcadia, alongside £210 million in security – which includes the additional £25 million agreed with The Pensions Regulator.
Trustees of Arcadia’s pension scheme said the proposed funding “materially enhances the security of the benefits of the 9,500 pension scheme members”.
The Pensions Regulator had previously told Green he needed to top up his contribution if it was to support Arcadia’s proposed CVA, especially since the firm planned to halve its annual pension contributions from £50 million to £25 million for three years.
“Following extensive discussions with the company, shareholders, the trustees of the pension schemes, the PPF and advisers, we are pleased that additional security has been agreed in support for the pension schemes which brings the total security value to £210 million,” The Pensions Regulator said.
“This is in addition to agreed contributions of £100 million to be paid to the schemes by Lady Green.
“Given this enhanced level of support, we now consider the updated CVA proposals are sufficient because they provide better protection for scheme members in these difficult circumstances.
“We recognise that the best support for any pension scheme is a trading employer and we feel the CVA proposals now provide the right balance between security for the pension schemes and the chance of sustainability for the company.”
Meanwhile, the Pension Protection Fund’s chief executive Oliver Morley told BBC News that it would “now vote in support of the Arcadia Group Limited CVA”.
The tussle with the pension groups had been another headache for Green, who is also facing down landlords pushing for changes to the CVA proposals.
Under the plans Lady Green offered landlords a 20 per cent stake of any proceeds if Arcadia is eventually sold.
Arcadia directors will meet creditors – which includes The Pensions Regulator, the Pension Protection Fund and landlords – later today 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.
Arcadia is the parent company of Topshop, Topman, Burton, Dorothy Perkins, Miss Selfridge, Wallis and Evans.
The CVA includes plans to shut 23 stores, resulting in 520 job cuts, as well as rent reductions on 194 additional stores across its UK and Irish operations.
Arcadia’s 11 Topman and Topshop stores in the US are also set to either close down or be sold off.
Another 25 stores under the Evans and Miss Selfridge fascias will shut down as part of separate insolvency proceedings, including the flagship Miss Selfridge store on Oxford Street.
“We hope that the landlords and other creditors will follow [The Pensions Regulator and Pension Protection Fund] and we can get the company back on a strong footing in all the markets where we trade,” Arcadia chief executive Ian Grabiner said.
“We would like to thank everyone involved including our lenders, the trustees, TPR and PPF for all their hard work over the last few weeks.
“The board would also like to thank all of our staff for their hard work and support during this challenging time.”