// Arcadia Group seeking to borrow up to £50m to shore up its future during coronavirus pandemic
// It has approached banks about a new round of borrowing against its new distribution centre in Daventry
// It is no clear if a deal has been reached yet.
Sir Philip Green’s Arcadia Group retail empire is reportedly seeking to borrow up to £50 million against its distribution centre to support the business through the coronavirus crisis.
According to Sky News, the fashion group has approached banks and hedge funds about a new round of borrowing against its new distribution centre in Daventry, Northamptonshire.
It is not yet clear whether a deal has been reached.
All 550 UK stores in the Arcadia portfolio are currently closed due to the government-mandated lockdown, and the company is looking to shore up its future during the Covid-19 pandemic.
- Sir Philip Green’s Arcadia faces winding-up order & could walk away from leases
- 14,000 staff furloughed at Arcadia as execs face 50% pay cuts
- Arcadia cancels all orders until further notice
Arcadia opened the logistics hub in Daventry last year, and it forms a central part of its Topshop logistics network.
Green’s wife Lady Tina Green is the ultimate owner of Arcadia and has security over it.
She reportedly agreed to subordinate her debt position to allow Arcadia to borrow against the distribution centre last year.
Earlier this month, Arcadia announced it was furloughing 14,500 of its 16,000 staff.
Meanwhile senior leaders took a pay cut of between 25 per cent and 50 per cent, with Arcadia chief executive Ian Grabiner opting to receive no salary or benefits until further notice.
Earlier this week, news emerged that Arcadia was reportedly facing a winding-up order as it cancelled payments to suppliers in a bid to stay afloat amid the coronavirus pandemic.
According to The Sunday Telegraph, court records showed that Principle Systems, a subsidiary of marketing company Principle Global, has filed a winding-up petition against the billionaire’s retail empire.
Principle System’s developed furniture and branding for the latest Ivy Park and Kate Moss collections in Arcadia’s Topshop chain.
In addition, according to the Sunday Times, Arcadia could serve notice on landlords to walk away from many of its 550 stores this week.
The firm has also already demanded rent cuts from landlords due to the store closures and paused payments to its pension fund, which had a deficit of up to £727 million in 2018.
Arcadia – like many other fashion retailers – said the coronavirus pandemic has led to a dramatic reduction in revenue for the business.
The pandemic has exacerbated Arcadia’s problems after several years of decline and a belated entrance to the online retail market.
The firm was also the middle of a major restructure through a CVA, which has already seen it permanently shut down at least 12 stores since the Christmas trading season.