Doubt hangs over the future of Philip Green's crumbling Arcadia Group after it postponed a crucial vote because it had failed to gain enough support from landlords for a major overhaul.
The development leaves 18,000 jobs in the balance. Under the planned overhaul, Arcadia would close six stores in the Republic: four in Dublin, one in Cork and one in Galway. The closures would span Arcadia's retail brands, including Topshop, Dorothy Perkins, Miss Selfridge, Evans and Wallis.
The flagship Topshop outlet at St Stephen’s Green in Dublin would be among the closures, as would the brand’s shop in the Jervis Shopping Centre in Dublin.
Arcadia executives now face a week of fraught meetings with landlords to win support for their plans. They need approval from landlords to restructure debts, cut rents and shorten leases to save his group.
In a statement on Wednesday, Arcadia said it had adjourned until June 12th a vote on the implementation of company voluntary arrangements, a form of insolvency that will allow the group to restructure, providing enough creditors agree.
Arcadia's chief executive Ian Grabiner said: "We believe that with this adjournment, there is a reasonable prospect of reaching an agreement that the majority of landlords will support."
Arcadia said it had the full backing of trade creditors and a significant number of landlords, but would not disclose how many of the CVAs, which have been set up for a number of the company’s subsidiaries, had failed to gain the support needed.
Unsecured creditors of the group, primarily landlords, suppliers and local authorities, were asked to vote on seven separate proposals, each requiring a 75 per cent majority to pass. Not all of the proposals gained the required threshold, forcing a new vote on June 12th.
Improved
The chances of approval appeared to have improved on Tuesday evening, after the Green family and Arcadia reached agreement with the UK Pension Regulator over the funding of the Arcadia defined benefit pension scheme. That cleared the way for the Pension Protection Fund to vote in favour.
However, on Wednesday Intu, one of Arcadia’s biggest landlords, said that it would not support the proposals.
Arcadia, whose brands once commanded significant market share, has been hit by intense competition on the UK high street, by the shift to online shopping and by big increases in the costs involved in running bricks-and-mortar stores.
According to figures in the CVA documentation, earnings before interest, tax, depreciation and amortisation are set to fall to just £30 million (€33.8 million) in the year to August, down from £219 million in 2016. Same-store sales are expected to fall 9 per cent this year.
However, the restructuring proposals drawn up by Arcadia and its advisers Deloitte have aroused intense opposition from landlords, who have cast doubt on the retailer's proposed recovery plan and expressed resentment that Green and his wife Tina, having taken billions of pounds out of the company, are now asking for rent cuts.
Green did not attend the creditor meeting. – Copyright The Financial Times Limited 2019
