Arcadia holds crunch CVA vote
Written by Hannah McGrath
The future of Philip Green’s Arcadia retail empire is set to be decided at a crunch vote today after it emerged that landlord Intu was planning to reject proposals for a Company Voluntary Arrangement (CVA).
It was reported by Sky News yesterday that Intu, Arcadia’s second biggest landlord, could vote to scupper the CVA rescue deal put forward by Green, potentially tipping the High Street giant - which includes Topshop, Dorothy Perkins, Miss Selfridge and Burton - into administration.
The proposed CVA - an insolvency measure which enables a firm to renegotiate rents with landlords - will need 75 per cent support from Arcadia’s creditors in order to pass.
If they reject the offer, it could lead to scores of store closures and cast doubt over the future of 18,000 jobs across the brands in Arcadia’s retail empire.
Green was forced to postpone a vote on the CVA last Wednesday and climb down over proposed rent cuts of 30 to 70 per cent, which have since been revised down to 25 to 50 per cent reductions – a move that would cost his family nearly £30 million over a three-year period.
Intu owns 35 Arcadia stores, reported to be 15 per cent of the total vote at today’s meeting.
Under the terms of the proposed deal - which includes six separate CVAs - nearly 50 stores would close, along with the loss of hundreds of jobs; with landlords taking on 20 per cent of the company.
Last night, Arcadia confirmed that The Pensions Regulator and the Pension Protection Fund - which would likely need to step in to safeguard around 9,500 pension scheme members - had approved amendments to the CVA plan.
If Arcadia does collapse into administration, it would mark one of the most significant developments in the ongoing turbulence in the UK’s retail sector, which has seen High Street names including House of Fraser, Mothercare and Toys R Us collapse, while Debenhams and others battle to drive through plans for their own CVAs.
Commenting on the likely outcome of today’s meeting of Arcadia creditors, Chris Field, chairman of Retail Connections, said: “I think they'll reject Philip Green's current rescue deal and there will be more discussions, but at some point, the landlords and shareholders are going to have to accept some kind of a deal.
“The UK retail environment is still a difficult one and, inevitably, there will be some casualties as the High Street reinvents itself.”
However, he said that while the deal remains “on a knife edge” the outcome of Green’s retail empire is by no means certain.
He concluded: “Things never are as dire as the business owners like to say, and Philip is no fool; this is a man who won Retailer of the Year just a few years ago and, ultimately, money comes first - this could well be the catalyst for reinvention, rather than the ultimate road to ruin for Arcadia."
Arcadia Group and Intu Properties did not respond to a request for comment.