Sir Philip Green’s Arcadia retail empire AVOIDS administration
Lady Green to the rescue! Sir Philip’s wife ploughs £200m into Arcadia as retail empire AVOIDS administration after rescue deal is backed in knife-edge vote – but 50 stores WILL close
- 18,000 jobs were saved today in a rescue package worth around £440million
- Arcadia, which runs TopShop, Wallis, Burton and others had asked landlords to accept massive rent reductions to prevent the business folding
- Last week a vote was pulled with the seven company voluntary arrangements facing defeat but today a less generous deal was granted by creditors
- It means Lady Green will plough in £230m into the company and its pensions
- And Arcadia has signed over £210m of assets as security on pension payments
- But 23 stores to close, plus 25 Miss Selfridge and Evans to go from restructuring
Sir Philip Green, pictured with his wife Tina Green at the Cannes Festival in France in 2011
Sir Philip Green’s wife has agreed to plough almost £250 million into her husband’s troubled retail empire to save it from collapse.
Her promise has meant the Arcadia group today won enough backing from landlords to push through restructuring plans that will cut rents and save jobs, the company said.
All seven company voluntary arrangements (CVAs) passed in a key vote this afternoon, which means the majority of the 18,000-strong workforce will keep their jobs across the Arcadia brands – Topshop, Evans, Burton, Wallis, Topman, Dorothy Perkins and Miss Selfridge.
Arcadia said Lady Tina Green, Sir Philip’s wife who is the group’s majority shareholder, will invest £50million into the company, on top of £50million funding already provided in March.
She will also pour £25m into the pension scheme on four occasions in the next three years.
And she will top up the difference between the rent reductions the Greens asked for and the ones they got – which will set her back £9.5m in each of the next three years.
On top of the money personally promised by the business’s largest shareholder, the firm itself has agreed to hand over £210 of assets to provide backing for its pension scheme, bringing the total sizer of the deal to around £440million.
But pensions contributions will fall from £50million to £25million a year for three years, Arcadia said.
Around 1,000 jobs are at risk with 23 stores to close under the company voluntary arrangements (CVAs), while another 25 Miss Selfridge and Evans shops will be shut in a wider restructuring.
Landlords will also receive smaller amounts of rent on certain properties, with some reduced to half the original price.
Arcadia is the company behind Topshop (pictured), Wallis, Burton and a raft of other brands
Arcadia Group chief Ian Grabiner said: ‘We are extremely grateful to our creditors for supporting these proposals and to Lady Green for her continued support.
‘After many months of engaging with all our key stakeholders, taking on board their feedback, and sharing our turnaround plans, the future of Arcadia, our thousands of colleagues, and our extensive supplier base is now on a much firmer footing.
‘From today, with the right structure in place to reduce our cost base and create a stable financial platform for the group, we can execute our business turnaround plan to drive growth through our digital and wholesale channels, while ensuring our store portfolio remains at the heart of our customer offer.
‘I am confident about the future of Arcadia and our ability to provide our customers with the very best multi-channel experience, deliver the fashion trends that they demand, and ultimately inspire a renewed loyalty to our brands that will support the long-term growth of our business.
‘Finally, I would like to thank all of our team and advisors for their support throughout the CVA process. It has been incredibly challenging for all concerned but I believe this is the right outcome for all our creditors.’
The proposals were passed at a second meeting today, which came a week after the first was postponed. The initial vote was adjourned after it became clear that there was not sufficient support among landlords.
Sir Philip and his wife Lady Green then proposed less severe rent cuts in a bid to appease the opponents of the proposals.
However, the CVA remained contentious, with some landlords reported to have voted against.
Sir Philip Green and his wife Tina outside a Topshop store in Dublin in June 2006
Speaking to the press after the meeting but before the result, Oliver Buhus from supplier Paragon Clothing said landlords had been ‘ruthless and self-serving’.
‘There’s no sense of taking an initiative to act collectively, it’s each landlord for himself,’ he said.
The proposals, which were launched last month, involve the closure of 23 stores in the UK and Ireland.
Another 11 Topshop and Topman stores in the US were earmarked for closure, while an additional 25 Miss Selfridge and Evans stores were also slated to be axed.
In total, at least 1,000 employees are likely to be affected.
The initial plans also included a reduction in the company’s contributions to its pension fund, alongside a fresh injection of cash into the scheme.
However, Arcadia agreed with the pensions watchdog last week that Sir Philip would contribute another £25million – bringing the total cash and security package to the value of £310million.
Speculation began early this year that Sir Philip would look to either sell off the company, or close stores.
In March, Arcadia confirmed it was exploring options to improve efficiency in the business.
Later that month, it hired property advisers to assess its estate while drawing up restructuring plans.
In April, US investor Leonard Green & Partners sold its 25 per cent stake in Topshop and Topman back to the parent company, in a move which Arcadia said simplified its structure and would allow the board to focus on restructuring.
The news comes just weeks after Sir Philip failed to appear on the Sunday Times Rich List for the first time in 17 years.
His reputation has been left damaged by the 2016 collapse of BHS, which resulted in the loss of 11,000 jobs.
The tycoon faced criticism for his handling of the retailer and eventually agreed to pay £363million of his money into its pension pot.
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