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Philip Green agrees £25m pension deal ahead of key vote Philip Green wins key vote for rescue plan ahead of meeting
(about 1 hour later)
Sir Philip Green has agreed to inject an extra £25m into Arcadia's pension fund ahead of a crucial vote to secure the future of the retail giant. Sir Philip Green has won the backing of the Pension Protection Fund (PPF) for his plan to rescue Arcadia ahead of a crucial vote on Wednesday.
The Topshop owner also said Lady Cristina Green, Sir Philip's wife and Arcadia's largest shareholder, will pump £75m into the pension scheme. The owner of Topshop has struck a £385m deal to secure its pension schemes, including a contribution from Lady Cristina Green, Sir Philip's wife and Arcadia's largest shareholder.
The agreement with The Pensions Regulator is key to Sir Philip getting backing for his rescue plan. The PPF said it would now "vote in support" of Arcadia's restructure.
On Wednesday, creditors will decide on a deal that will see 50 shops close. But the plan, which includes closing 50 stores, needs the backing of landlords.
The restructuring will need the backing of landlords who would have to agree to a rent cut on Arcadia's stores. They would have to agree to a rent cut on Arcadia's stores, which also include Burton, Miss Selfridge, Dorothy Perkins and Wallis.
The restructuring would be done through a company voluntary arrangement (CVA), an insolvency process that allows a business to reach an agreement with its creditors to pay off all or part of its debts.The restructuring would be done through a company voluntary arrangement (CVA), an insolvency process that allows a business to reach an agreement with its creditors to pay off all or part of its debts.
The Pension Protection Fund, which represents The Pensions Regulator and the Arcadia pension fund trustees, will vote on the CVA on Wednesday. In a deal with The Pensions Regulator, trustees of Arcadia's pension schemes will be granted security over £210m worth of assets by Arcadia, up from a previous offer of £185m.
Its support is vital for Sir Philip to secure approval for his rescue plan. Lady Green will inject £100m into the schemes over three years.
And Arcadia will make £75m worth of contributions to the company's pension schemes.
Oliver Morley, chief executive of the PPF, said: "We are pleased that the company and shareholder have today agreed a funding and security package for the scheme. Based on this commitment, we will now vote in support of the Arcadia Group Limited CVA tomorrow"
But he added: "While we are the largest creditor in this CVA, other creditors will also need to agree the terms for it to be successful."
Arcadia's chief executive Ian Grabiner, said: "We hope that the landlords and other creditors will follow suit and we can get the company back on a strong footing in all the markets where we trade."Arcadia's chief executive Ian Grabiner, said: "We hope that the landlords and other creditors will follow suit and we can get the company back on a strong footing in all the markets where we trade."
If the creditors vote against the plans to shut stores and cut rents, the High Street giant could go into administration.
Consumer expert Kate Hardcastle said the pension deficit has been "one of the biggest pressures" on Arcadia.Consumer expert Kate Hardcastle said the pension deficit has been "one of the biggest pressures" on Arcadia.
"It might change a few minds absolutely," she said. "But I'd still say the result of the CVA vote is not certain. This will alleviate a lot of concerns, however.""It might change a few minds absolutely," she said. "But I'd still say the result of the CVA vote is not certain. This will alleviate a lot of concerns, however."
Lady Green's "voluntary contribution" will be paid over three years.
It is part of a larger agreement between Arcadia, the trustees of the pension schemes and The Pensions Regulator to provide £210m worth of security to the schemes.
Arcadia currently has more than 560 shops across the UK and Ireland, and employs 22,000 staff.Arcadia currently has more than 560 shops across the UK and Ireland, and employs 22,000 staff.
It has already shut 200 of its UK stores over the past three years amid intensifying competition from a crop of more contemporary "fast fashion" retailers ranging from High Street chains such as Zara and H&M to pure online players like Asos.It has already shut 200 of its UK stores over the past three years amid intensifying competition from a crop of more contemporary "fast fashion" retailers ranging from High Street chains such as Zara and H&M to pure online players like Asos.
Arcadia has also faced the same problems as other High Street retailers, including rising business rates and labour costs, too many unprofitable stores and inflexible leases that make it hard to close failing shops.Arcadia has also faced the same problems as other High Street retailers, including rising business rates and labour costs, too many unprofitable stores and inflexible leases that make it hard to close failing shops.
AnalysisAnalysis
By Colletta Smith, BBC consumer affairs correspondentBy Colletta Smith, BBC consumer affairs correspondent
Philip Green's retail empire dressed a generation.Philip Green's retail empire dressed a generation.
In my teenage years almost every Saturday was spent moving from one Arcadia store to another - from crowding into Miss Selfridge photo booths for pictures with friends to fawning over the Kate Moss collection in Topshop.In my teenage years almost every Saturday was spent moving from one Arcadia store to another - from crowding into Miss Selfridge photo booths for pictures with friends to fawning over the Kate Moss collection in Topshop.
But times have changed.But times have changed.
Today's teenagers have grown up expecting to order clothes to their home and buy them on their phone.Today's teenagers have grown up expecting to order clothes to their home and buy them on their phone.
Boohoo, Misguided, and PrettyLittleThing have so many cheaper items available that they've hooked a younger generation who expect to wear an item once, post a picture on Instagram and then buy something else for the next Friday night.Boohoo, Misguided, and PrettyLittleThing have so many cheaper items available that they've hooked a younger generation who expect to wear an item once, post a picture on Instagram and then buy something else for the next Friday night.
But Arcadia hasn't held onto those in their 30s who were loyal for years.But Arcadia hasn't held onto those in their 30s who were loyal for years.
The fact that Topshop haven't stocked above size 18 in their stores is alienating for women with changing body shapes.The fact that Topshop haven't stocked above size 18 in their stores is alienating for women with changing body shapes.
The campaign to boycott TopShop after the removal of a pop-up stand promoting a book on feminism did the company no favours. Negative publicity about Sir Philip Green has done nothing to help a business so closely associated with him personally.The campaign to boycott TopShop after the removal of a pop-up stand promoting a book on feminism did the company no favours. Negative publicity about Sir Philip Green has done nothing to help a business so closely associated with him personally.
For many in an age group increasingly conscious about the impact of their spending, the teenage crush on Topshop is over.For many in an age group increasingly conscious about the impact of their spending, the teenage crush on Topshop is over.
Ms Hardcastle said even if the rescue deal is passed, Arcadia will still have a lot more work to do.Ms Hardcastle said even if the rescue deal is passed, Arcadia will still have a lot more work to do.
"There is a lot of fat within the Arcadia group and it faces a lot of challenges. It is hard to look at the business and say that anything will be the saviour of the organisation."There is a lot of fat within the Arcadia group and it faces a lot of challenges. It is hard to look at the business and say that anything will be the saviour of the organisation.
"It is a pretty wobbly table and people will look at how many legs it needs to prop it up.""It is a pretty wobbly table and people will look at how many legs it needs to prop it up."