Sir Philip Green, pictured with his wife Tina Green at the Cannes Festival in France in 2011
Sir Philip Green’s Arcadia retail empire has won enough backing from landlords to push through restructuring plans that will cut rents, the company said today.
All seven restructuring plans passed, which means the majority of the 18,000-strong workforce will keep their jobs across the Arcadia brands – Topshop, Evans, Burton, Wallis, Topman, Dorothy Perkins and Miss Selfridge.
Arcadia said Lady Tina Green, Sir Philip’s wife who is ultimate owner of the business, will invest £50million into the company, on top of £50million funding already provided in March.
But pensions contributions will fall from £50million to £25million a year for three years, with security of £210 million on Arcadia assets.
Sir Philip’s retail empire had faced a make-or-break vote on its future as it sought approval for restructuring plans, deciding the fate of 18,000 employees.
Arcadia reconvened a meeting today in London to vote on seven separate company voluntary arrangement (CVA) proposals.
The votes were for creditors – primarily landlords of the stores – who had to either agree to cut their rents by approving the deal, or risk the collapse of Arcadia, leaving them with empty sites and no rent.
Arcadia is the company behind Topshop (pictured), Wallis, Burton and a raft of other brands
Voting was supposed to take place last Wednesday, but was postponed when it became clear that some of the CVA proposals were heading for failure without more concessions from Sir Philip and Arcadia.
It was understood that only those proposals which did not receive enough support at a previous meeting last week were voted on again today.
A further 25 Miss Selfridge and Evans outlets have also been earmarked for closure as part of a restructuring process that is separate from the CVAs.
Sir Philip has since offered a concession to landlords in a bid to sweeten the deal, proposing to impose less severe rent cuts than originally planned.
Under the initial proposals, shop owners were facing rent reductions of between 30 per cent and 70 per cent. This will now be reduced to a range of 25 per cent to 50 per cent.
Ian Grabiner, chief executive of Arcadia Group, said today: ‘We are extremely grateful to our creditors for supporting these proposals and to Lady Green for her continued support.
‘After many months of engaging with all our key stakeholders, taking on board their feedback, and sharing our turnaround plans, the future of Arcadia, our thousands of colleagues, and our extensive supplier base is now on a much firmer footing.
‘From today, with the right structure in place to reduce our cost base and create a stable financial platform for the Group, we can execute our business turnaround plan to drive growth through our digital and wholesale channels, while ensuring our store portfolio remains at the heart of our customer offer.
Sir Philip Green and his wife Tina outside a Topshop store in Dublin in June 2006
‘I am confident about the future of Arcadia and our ability to provide our customers with the very best multi-channel experience, deliver the fashion trends that they demand, and ultimately inspire a renewed loyalty to our brands that will support the long-term growth of our business.
‘Finally, I would like to thank all of our team and advisors for their support throughout the CVA process. It has been incredibly challenging for all concerned but I believe this is the right outcome for all our creditors.’
Speaking before the vote, one landlord said the Arcadia CVA plans were different from previous ones from House of Fraser or Debenhams because the smaller units would be easier to fill with new occupiers.
‘There was some sympathy for Debenhams,’ he said. ‘Whereas here you’ve got a bigger pool of potential tenants. You’ve got more options so it’s easier to vote against it.
‘Not that many people are that emotional about it – there’s no tears for Philip Green.’
Yesterday, Sky News reported that shopping centre owner Intu remained unconvinced by the proposals and was planning to vote against them.
Without the backing of the property giant, which owns the Trafford Centre in Manchester and Lakeside in Essex, the vote is set to be a close one for Arcadia.
In the House of Commons yesterday, Business Minister Kelly Tolhurst, answering a question from Labour’s Jenny Chapman, said: ‘We stand ready to do what we can along with my colleagues in MHCLG (Ministry of Housing, Communities and Local Government) if closures occur.
‘We are working with the Retail Sector Council and we’re committed to making sure we are working with the retail sector and high streets to make sure we can really truly grow our high streets and protect retail for the future.’
Some landlords have been concerned that, by agreeing to cut Arcadia’s rent bills, other rival chains may start demanding rent cuts of their own.