Property giants join forces to demand improved Green deal A group including British Land and Hammerson is hiring advisers to demand better terms from an Arcadia CVA, Sky News learns.

Image: Top Shop is part of Sir Philip Green's Arcadia empire
  • image/svg+xml Why you can trust Sky News Some of Britain’s most powerful property groups will collectively demand a bigger stake in Sir Philip Green’s high street empire as part of make-or-break restructuring talks that will determine the company’s fate.Sky News has learnt that commercial landlords including British Land, Hammerson and Aviva are on the verge of appointing advisers to help oversee negotiations with Sir Philip’s Arcadia Group in the coming weeks. City sources said on Thursday that PJT Partners, an independent advisory firm, was in pole position to advise the syndicate of at least six landlords.The other property owners that would be part of the group would include Aberdeen Standard Investments, M&G Investments – part of the insurance giant Prudential – and Sovereign.An insider at one of the real estate companies said the objective of them joining forces would be to secure improved terms for all of the landlords to Sir Philip’s more than 500 outlets across Britain. Advertisement Negotiating in such a way would replicate a model typically used by bondholders in financial restructuring processes, they added, although each landlord would be responsible for talks about the closure of or rent cuts applied to their own individual shops. The owners of Arcadia’s stores, which trades under brands such as Topshop, Burton and Dorothy Perkins, have so far been offered an equity stake of approximately 10% in return for endorsing a Company Voluntary Arrangement (CVA).

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    • CMA’s audit revolution hinges on Grant Thornton decision A CVA – a contentious insolvency mechanism used by dozens of struggling retailers – would require the approval of at least three-quarters of Arcadia’s creditors by value.Some landlords are understood to be preparing to seek a significantly larger stake and more than the £50m that Sir Philip has so far committed to aiding the restructuring of the business.The billionaire is also said to have pledged a further £50m secured loan if the CVA is approved.

      Sir Philip Green
      Image: Sir Philip Green has so far committed £50m to aiding the restructuring of the business

      News of the store owners’ decision to negotiate collectively comes 48 hours after Arcadia’s board decided to continue planning for a CVA, despite uncertainty about whether landlords and pension stakeholders are prepared to back it.If a CVA vote ultimately looks unwinnable in the coming weeks, Arcadia and its advisers are expected to launch an immediate sale process for the business.Under the existing plans Arcadia’s CVA would involve closing fewer than 50 UK stores but would involve significant rent cuts across much of the rest of the estate.The consent of landlords is not the only obstacle facing Arcadia.Sky News revealed last month that the company was seeking to halve the annual contributions it makes to its employee pension scheme to £25m as it seeks ways to cut costs.To mitigate that reduction, Arcadia would pledge the freehold of its Oxford Street store to the pension scheme, The Sunday Times has reported.Both The Pensions Regulator – with whom Sir Philip fought a running battle in the aftermath of BHS’s collapse – and Arcadia’s pension trustees are understood to oppose that plan.The discussions about Arcadia’s future are increasingly looking like the denouement to Sir Philip’s decades-long stint as a key player on the UK high street.The tycoon, who recently paid $1 (76p) to buy back his private equity partner’s 25% stake in Topshop and Topman, has been remote from the negotiations about Arcadia’s future.Ian Grabiner, the company’s chief executive, has been spearheading the talks, while Deloitte and an army of other professional advisers have been working on the CVA proposal.A pair of corporate restructuring veterans have also been recruited to the company’s board.Arcadia, which employs about 18,000 people, wants to replicate a restructuring path trodden by retailers such as Carpetright, Mothercare and New Look in the last two years as trading conditions on the high street have deteriorated.If the CVA does get the green light from Arcadia directors, it is now expected to be launched around the middle of this month, although the timetable remains subject to further delays.The financial restructuring comes at a delicate time for Sir Philip, who has been embroiled in a storm over his behaviour towards Arcadia employees and his use of non-disclosure agreements to prevent former workers discussing their severance packages.Arcadia, British Land, Hammerson, Aberdeen Standard Investments and PJT all declined to comment.


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