Topshop owner Sir Philip Green averts collapse as rescue deal scrapes through
Arcadia Group offered a series of concessions in order to win enough support for crucial votes that were delayed last week.
Wednesday 12 June 2019 20:48, UK
Sir Philip Green has told Sky News "a win is still a win" after his high street retail empire narrowly averted the prospect of collapse.
Arcadia Group - whose brands include Topshop, Dorothy Perkins and Burton - needed to get 75% support in a series of rescue deal votes among creditors.
Under the so-called company voluntary arrangements (CVAs) and wider restructuring plans, the tycoon plans to close 48 of his 566 trading outlets, employing 18,000 staff across the UK and Ireland, to cut costs.
The vote in the City was delayed by a week as landlords held out for improved terms on rent cuts they were also being asked to approve at 194 of the remaining sites.
Following the voting drama, Sir Philip said: "Our team did an amazing job working 24/7 and the supply chain and our direct suppliers were amazingly supportive. Nobody faltered. They were fantastically supportive.
"We are in 32 countries. Our supply chain goes all over the world and the knock on damage if this had not gone through would have been ginormous.
"It is good to know there is still support out there for the business, for my family and for me. There is no way in the world that I wanted it to end up in a catastrophe.
"From a personal point of view, even if you score in the 95th minute. A win is still a win."
Sky News reported on Tuesday how the ballots - on what were described as final offers - were hanging in the balance as Arcadia's second-biggest landlord, Trafford Centre owner Intu Properties, continued to oppose the terms.
After the results were declared, an Intu spokesperson said: "We firmly believe that the terms of the Arcadia CVA are unfair to our full rent paying tenants and not in the interests of any of our other stakeholders, including Intu shareholders and the 130,000 people whose jobs rely on the success of our prime shopping centres.
"While we are disappointed with the outcome of today's vote, we will work constructively with Arcadia to achieve the best outcome for both sides."
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Other stakeholders in the rescue process included The Pensions Regulator (TPR) and the Pension Protection Fund (PPF) which supported the plans after the Green family agreed improved terms for its retirement scheme.
A rejection of the rescue plans would have likely meant its 9,500 pension scheme members would have required the PPF's support.
Chair of the Work & Pensions Committee of MPs Frank Field - long a thorn in Sir Philip's side over his pension commitments at BHS - welcomed the CVA results but said he had written to the tycoon and his wife Lady Tina Green seeking a "binding" guarantee that pension-holders would receive their full entitlement.
Arcadia - like rival high street operators - have come under pressure from a collapse in consumer confidence at a time of increased costs from things such as business rates and minimum wage rules.
But critics also pointed to many Arcadia stores becoming tired and lacking value for consumers.
Lady Green, who is ultimate owner of the business, pledged an additional £50m of investment to help lift Arcadia's offering and bolster support for the CVAs.
Commenting on the result, the company's chief executive Ian Grabiner said: "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."
Several sources told Sky News the atmosphere at the CVA vote was fairly dark - with one supplier hitting out at landlord opposition following the conclusion of the voting process as the results were awaited.
Oliver Matei-Buhus, operations director at Paragon Clothing, said: "The landlords are ruthless and self-serving and it's a shame there's no spirit of community bearing in mind Arcadia has been an excellent tenant for many years.
"It's a short term view and I don't think that helps."
Commenting on the result Chloe Collins, senior retail analyst at analytics firm GlobalData, said the hard work starts now.
She wrote: "Although Arcadia's CVA has been approved, it is unsurprising that it faced (a) backlash from some landlords who have doubts about the retailer's future.
"Its leading brands - Topshop and Topman - still have a strong following among millennials, however many of the other, such as Miss Selfridge and Dorothy Perkins, are now irrelevant in a highly saturated market and the chances of revival are slim, leading landlords to question whether other retailers could offer their spaces more longevity."