Sir Philip Green offers to put extra £185m of security behind Arcadia pension scheme in effort to win support for a major overhaul of Topshop to Dorothy Perkins empire
Sir Philip Green has offered to put an extra £185 million of security behind the Arcadia pension scheme in an effort to win support for a major overhaul of his Topshop to Dorothy Perkins retail empire.
The sum is chiefly made up of property assets and includes security over the flagship store on Oxford Street. The agreement would mean that in a crisis the buildings could be sold to fund payouts to pensioners.
The offer takes the package put forward by Green and Arcadia to support the pension scheme to £360 million over the next three years. It includes £100 million directly from his family bank account, controlled by his wife Tina. The mogul has made the pledge as part of a ‘highly complex’ plan to reshape his empire before a vote on June 5.
Offer: Sir Philip Green is using the Oxford Street store as security in the deal
The proposal would see 23 of his 566 shops close, while also reducing the rent paid to landlords at almost 200 stores.
Sources said last night that landlords and The Pensions Regulator are engaged in daily conversations with the 20,000-employee group.
Arcadia says many existing lease contracts include clauses guaranteeing increases which have taken rents to
unsustainable levels. The company must win support from The Pensions Regulator and the Pension Protection Fund – the entity which will take responsibility for the £750 million deficit if Arcadia fails. The group’s plan involves the use of a temporary insolvency process known as a Company Voluntary Arrangement that allows retailers to tear up leases and negotiate new terms.
The alternative is almost certainly a full-blown administration which would put the future of the group in doubt unless a rescuer could be found.
Confidential company documents sent to creditors show the value of the £185 million of assets has been calculated based on a zero valuation of the group. That suggests the value of the property would be higher if the overhaul rejuvenates the business or triggers interest from buyers.
The Pension Protection Fund will vote on the deal on behalf of Arcadia’s 9,500 pensioners.