Arcadia seeks CVA greenlight in face of landlord revolt

The future of around 250 stores occupied by brands from the UK's Arcadia group is in the balance, as proposed rental cuts from chairman Sir Philip Green face a key landlord vote this week.

Fashion empire Arcadia - whose labels includes Topshop, Burton, Miss Selfridge, Dorothy Perkins, Evans and Wallis - currently occupies 570 stores across the UK. However, charges in recent years that Green has underinvested in the business, which is bloated with 'tired brands' according to analysts, has placed increasing pressure on the group.

Last week, Green drew up plans to launch seven company voluntary agreements (CVAs) to shut around 50 stores, and seek rent reductions on another 194 shops.

The UK's CVA mechanism allows occupiers to break rental contracts when the survival of their business is at stake. However, each requires support from 75% of creditors, and Green must pass all seven to save Arcadia, experts have said.

Yet a charged meeting with property owners in London on June 5 was adjourned before landlords could vote on the CVAs, with the ballot rescheduled for June 12.

According to sources, Arcadia's advisers Deloitte paused the meeting before the vote could take place, after an initial tally made it clear that the CVAs would not pass. Intu, Arcadia's biggest landlord, is amongst those believed to have stood against the motion, alongside Landsecs, Aviva and M&G.

British Land is understood to have backed the deal, after agreeing a reletting concession from Arcadia, should it find alternative tenants for the affected stores in its portfolio.

Improved terms
On June 6, Arcadia unveiled improved terms for the CVAs, including rent reductions of between 25% and 50%, compared with the previous proposals of between 30% and 70% across nearly 200 stores. Arcadia said that landlords who had already voted in favour of the CVAs would benefit from the revised deal.

Group shareholder and wife of Green Lady Tina Green will finance the amendment, which is expected to cost some £9.5 mln (€10.7 mln) in its first year.

Tina Green has also agreed to plug Arcadia's pensions deficit with £100 mln, with a further £75 mln coming from Arcadia itself, plus security from around £210 mln of assets.

Arcadia's CVA push comes in the wake of recent highstreet failures including Debenhams and House of Fraser, and an increasingly difficult trading environment for troubled landlord Intu.


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