Deal to save high street giant Arcadia from administration secured but 50 stores will close
- Credit: Archant
A deal to save retail giants Arcadia from entering into administration has been struck.
Sir Phillip Green's retail empire needed to win 75% of a landlord vote to enter a Company Voluntary Arrangement (CVA) and save the company from administration.
Today landlords who own Arcadia's stores across the country travelled to London for a meeting to vote on Sir Phillip's restructuring plan.
Under the plan, landlords agree to cut rent by up to 50% - lowering the rental costs which Arcadia says are simply too high in the current economic climate.
It will also see the closure of around 50 of Arcadia's 570 stores - specific stores are still unknown.
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The firm runs some of the high street's most recognisable brands including Topshop, Burton, Evans, Miss Selfridge and Dorothy Perkins and emplys more than 18,000 people.
To help persuade landlords to accept the cuts the Green family will be putting millions of pounds of their own money into the deal.
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A spokesman for Arcadia said: "Arcadia Group is pleased to announce that all seven of its Company Voluntary Arrangements (CVAs) have today been approved by the required majority of the companies' creditors, including its pension trustees, suppliers and landlords.
"As described in the CVA proposals, upon there being no remaining risk of challenge to the CVAs, the Group's majority shareholder, Lady Green, will invest £50m of equity into the Group, in addition to the £50m of funding already provided in March. Lady Green has also agreed to fund the cost of the amended rental reduction terms within the CVA proposals, as announced on 7 June.
"Separately, the Group has reached an agreement with the Trustees of the pension schemes, the Pensions Regulator and the Pension Protection Fund, by which Arcadia Group will reduce its deficit repair contributions from £50m to £25m per year, for three years, with security granted to the value of £210m over certain assets of the Group, to further support the schemes.
"As previously announced, Lady Green will provide an additional £100m of cash into the schemes to help bridge the shortfall, with funding of £25m per year for the next three years plus an additional £25m contribution."
Concerns were raised yesterday when it was revealed Intu, which owns around 35 of Arcadia's shop units and had the biggest single vote, would be voting against the deal to secure a CVA.
A CVA is so appealing for a company in crisis as it allows them to restructure without losing control and entering formal administration or liquidation.