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Sir Philip Green close to deal over Arcadia pension deficit Sir Philip Green agrees to put £25m into Arcadia pension fund
(about 5 hours later)
Sir Philip Green is understood to be close to agreeing a deal with regulators to plug a hole in Arcadia Group’s pension fund, paving the way for a rescue restructure of his fashion retail empire. Sir Philip Green has agreed to pump an additional £25m into Arcadia Group’s pension fund, in a deal with regulators that paves the way for a rescue restructure of his fashion retail empire.
An announcement could come as early as Tuesday afternoon. The move by the former billionaire follows a demand from the Pensions Regulator that he inject another £50m into the fund. This would come on top of a promise by Green and the company to put in £360m over three years. Green is understood to have handed security over additional property assets to the fund in response to a demand from the Pensions Regulator that he inject another £50m to fill the group’s pension black hole.
It is unclear exactly how much extra Green has agreed to, but one source said he wanted to make a “squeaky clean” deal that could not be questioned in future. The latest cash pledge comes on top of a promise by Green and Arcadia, which owns Topshop, Topman, Dorothy Perkins, Wallis, Burton, Miss Selfridge and Evans, to put £360m into the pension over three years.
Arcadia’s plan to cut rents and close stores via an insolvency procedure known as a company voluntary arrangement relies on reaching an agreement with the Pensions Regulator over funding of the retailer’s pension deficit of up to £750m. A source said he wanted to make a “squeaky clean” deal that could not be questioned in future.
Arcadia’s plan to cut rents and close stores via an insolvency procedure known as a company voluntary arrangement (CVA) relies on reaching an agreement with the Pensions Regulator over funding of the retailer’s pension deficit of up to £750m.
As a major creditor, the fund will have a significant vote at a meeting on Wednesday that is required to secure the CVA and avert a collapse into administration for Arcadia, which would put 18,000 jobs at risk.As a major creditor, the fund will have a significant vote at a meeting on Wednesday that is required to secure the CVA and avert a collapse into administration for Arcadia, which would put 18,000 jobs at risk.
The group, which operates 570 shops from Topshop to Burton and Miss Selfridge, must win approval from 75% of its creditors, most of whom are landlords. The restructure will enable it to close at least 23 stores and cut rents by up to 70% on nearly 200 more. The group, which operates 570 shops, must win approval from 75% of its creditors, most of whom are landlords. The restructure will enable it to close at least 23 stores and cut rents by up to 70% on nearly 200 more.
A further 25 UK stores are set to close as Arcadia puts the property holding companies of Miss Selfridge and Evans into administration. It is also closing 11 Topshop stores in the US. In return, Green has promised to hand landlords a 20% stake in the business and invest an extra £50m in cash in stores, part of a £135m turnaround plan intended to help Arcadia compete with rivals such as Asos, Zara and H&M.
The turnaround includes spending £75m on a new hi-tech distribution centre in Daventry and a step up in wholesale sales, including taking Topshop on to fashion retailer Asos’s online platform for the first time. Arcadia has also pledged £60m to upgrade its online operations.
But Arcadia’s restructure also includes the closure of a further 25 UK stores as the group puts the property holding companies of Miss Selfridge and Evans into administration. Miss Selfridge’s London flagship will also close in July.
Change is happening outside the UK too. Arcadia is to close 11 Topshop stores in the US and has closed two of its three remaining Australian Topshop stores in the past month.
Sir Philip GreenSir Philip Green
Retail industryRetail industry
Pensions Industry
TopshopTopshop
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