Sir Philip Green’s retail empire has offered landlords a 20% stake in the business as he aims to finalise a rescue restructure of his Topshop to Dororthy Perkins group as soon as Wednesday.
In talks intended to clear a path for the closure of about 60 of the group’s 570 stores and rent cuts on dozens more, Green has also offered a £50m cash investment for updating stores and online sales infrastructure at his Arcadia Group.
He had previously offered a £50m loan for the business and to give landlords a 10% share in the proceeds from any future sale of the business.
The latest offer comes as Green hopes to announce the financial rescue plan – which involves an insolvency process known as a company voluntary arrangement (CVA) – within days.
He is battling to secure backing from landlords and those acting on behalf of pensioners for a deal well ahead of the Arcadia’s next rental payment in late June.
As part of the rescue deal, Arcadia also wants to halve payments to its pension fund to £25m a year, only two years after agreeing to increase them to £50m.
Arcadia’s pension trustees, backed by the pensions regulator, are thought to want a £400m cash injection in order to agree to a cut in annual payments.
The scheme has a deficit of more than £537m based on the company continuing to operate. But that would rise to as much as £750m if Arcadia were to go bust.
The company has offered to hand over the freehold of Topshop’s flagship store, which is worth about £400m. That offer is not seen as sufficient as the property has a mortgage worth about £300m.
If a plan cannot be agreed, then Arcadia, which employs about 19,000 people, could face administration.
Landlords have been able to put pressure on the Arcadia Group as the company’s complex structure gives them more voting power than in the vast majority of CVA deals completed by retailers in recent years.
The firm may have to complete up to eight CVAs of property companies linked to Arcadia’s brands which include Miss Selfridge, Wallis, Evans, Burton and Outfit as well as Topshop, Topman and Dorothy Perkins.
Each require the backing of 75% of landlords. In most CVAs, suppliers and other trade creditors usually hold more sway in the voting process.
Some major landlords, including British Land and Hammerson, have been pushing for a stake worth up to 40%. They also want to see significantly more than £50m investment in the business and a more detailed plan of how the group can be turned around after years of under-investment.
While many high street fashion chains have suffered from a downturn in spending on the high street, Arcadia’s brands are being battered by rising competition from Asos, Zara, H&M and other brands.
One landlord said: “We have not got everything we need yet but things are moving in the right direction.”
Green, who has not been in the UK since October, is said to be keen to wrap up an exit from the group he bought for £850m 17 years ago.
With his reputation in tatters after the collapse of BHS and accusations of inappropriate behaviour, the entrepreneur has lost his appetite for the British high street.
