Philip Green has insisted that the £100m he has promised to Arcadia’s pension fund represents the “best outcome”, as his retail empire faces a make-or-break vote on its future next week.
The creditors of Arcadia, whose chains include Topshop and Dorothy Perkins, have to decide next Wednesday whether to accept a restructuring that will see more than 20 stores closed, rents cut on almost 200 more and a reduction in contributions to the retailer’s pension scheme.
After weeks of negotiations with landlords and creditors, Sir Philip’s wife Tina, the ultimate owner of Arcadia, proposed injecting £100m into the group’s defined benefit pension scheme over the next three years to help offset the reductions planned through the restructuring.
“I believe my wife’s voluntary offer of £100m to support the scheme and the security the company has offered will be the best outcome for the pension fund, staff and creditors,” the retail tycoon told the Financial Times on Friday.
Late on Friday it was made public that Sir Philip had been charged with four counts of misdemeanour assault in Arizona, according to state records. The FT spoke to Sir Philip before the charges emerged and he later declined to comment on them. He has previously denied the claims.
The support of Arcadia’s pension trustees, whose vote will be cast by the Pension Protection Fund because the scheme is in deficit, is essential for the approval of a restructuring of a retail business disrupted by e-commerce and beset by a lack of investment.
However, the Pension Regulator, whose views the PPF considers before voting, last week said the proposals were insufficient. It declined to comment on a Sky News report that the regulator was demanding another £50m. The PPF also declined to comment.
Talks between Arcadia, the regulator, the trustees and the Green family continue, according to people briefed on the process, and a last-minute agreement before the crunch vote remains a possibility. A 75 per cent majority is required for approval of the restructuring which is being done via a company voluntary arrangement.
The PPF changed its approach to CVAs votes following the collapse in 2016 of department store chain BHS, which Sir Philip had previously owned. The public outcry over BHS led to Sir Philip paying £363m to refinance its pension scheme.
As well injecting £100m, the pension fund will also get up to £185m of security over assets including Topshop’s flagship Oxford Circus store.
The retailer also sought to reassure creditors that Arcadia has a robust recovery plan, pledging £135m of investment in stores, IT and logistics over the next three years.
“The plan is that we get the business back on the right footing and recover the ebitda. It will be a combination of making it a leaner machine, more efficient with a better cost base and growing the business in new areas, like taking Topshop into Asos,” said Sir Philip.
Some landlords remain reluctant to back the CVA, citing doubts about the recovery plan and fears that the eventual number of store closures could be much higher.
“The headlines around the CVA were that there would be 20-odd store closures but that’s not how these things play out,” said one leading commercial property agent, who said the 194 leases set for rent reductions “are full of break clauses”.
“They made a massive play of saying ‘yes we’ve got hundreds of shops but we’re only closing 23, nothing to see here.’ But you have got to look behind the initial 23 and see all the rest. There’s a lot of focus on those [by landlords]”.
Sir Philip said: “We’ve had good dialogue with all landlords and those conversations are continuing.”
He added that there were no talks at present about a sale of the business, an event that under the proposed CVA could trigger payments to landlords.
“There are no discussions with anyone about a corporate transaction. It’s not appropriate at the moment. Let’s get the cost based sorted out and the business in the right shape. If someone serious turns up and there’s a conversation then we’ll have it.”
