Arcadia owners want big investments in return for rescue | Business

The owners of Sir Philip Green are seeking a significant increase in the Arcadia owner's investment in exchange for bailout support for his struggling fashion empire.

As the Guardian revealed last month, Green has proposed to invest £ 100m in this activity to encourage homeowners to support a bailout package including the closure of approximately 50 of Arcadia's 570 stores and rent on many others.

It is understood that he has offered this investment in the form of two loans of 50 million pounds, of which one has already been contracted by Arcadia, which includes Topshop, Dorothy Perkins, Miss Selfridge, Evans and Wallis.

However, homeowners are also seeking a green family cash injection, rather than borrowing, as well as a detailed business plan describing how the money will be spent.

One source said, "These are bady stores combined with the omnichannel offer type [digital services linked with click and collect] this means that the customer's proposal is convincing again. "

The owners believe that a cash investment would help Arcadia more than a loan, as it would not pay the retailer with ongoing interest payments and would also allow him to borrow against him.

They want to find a way to keep most of the hundreds of Arcadia stores, including Topshop and the multi-brand Outfit chain, which still attract buyers. The future of the group's other brands, such as Wallis and Evans, is more skeptical.

A number of Arcadia's main owners, including British Land, Hammerson and Aviva, plan to bargain collectively, following the advice of investment bank PJT Partners. Another important owner, Intu, would probably not want to participate in group bargaining. However, the Arcadia sites in its centers, which include key destinations such as the Manchester Trafford Center and the Gateshead Metrocentre, are unlikely to suffer the consequences of rent. cuts or closures.

Green has put 10% of the company's capital on the table, but it is understood that homeowners are not inclined to choose this option. Real estate companies may have trouble explaining to shareholders why they have taken a stake in a company that is seeing its sales decline after years of underinvestment and increasing competition, such as Zara, Primark and H & M, as well as online specialists such as Asos and Boohoo.

The retailer's advisors, led by Deloitte, had hoped to announce the details of the restructuring, known as the Voluntary Enterprise Agreement, this week. But the plans have been delayed because Arcadia is struggling to get enough support from the owners. The complex process of insolvency, which could involve up to eight different business entities, requires the approval of 75% of homeowners for each of them.

Alternatives to CVAs are either a business sale or an administration, but both solutions would be difficult to swallow for Green, whose reputation has already suffered since the collapse of the BHS department store, only one year after selling it for £ 1 to one. former bankrupt.

Arcadia has bought a US-based private equity firm Leonard Green a 25% stake in its Topshop chain and aims to halve annual payments to its pension fund from £ 50 million to £ 25 million in the UK. frame of a rescue plan designed to reduce costs and update the activity. to compete online.

The family offered to sell the property of Oxford Street's flagship store in London, Topshop, to the pension fund as part of the negotiations. It is estimated that the site has a value above £ 400m, but it is heavily mortgaged by a source suggesting it had less than £ 100m in equity.