Sir Philip Green is considering offering landlords shares in his struggling Arcadia group as he bids to win their backing for a restructure.
According to The Sunday Times, advisers to the billionaire tycoon are mulling a move to hand landlords a shareholding of up to 20% in Green’s fashion stable.
It would allow them to share a windfall in the group if it were to be sold following any insolvency process.
The Topshop owner could also offer landlords a lump sum to resemble the amount they would receive if the group were to go into administration.
Arcadia is expected to launch a company voluntary arrangement (CVA) in the coming weeks as Green seeks to slash rents and exit dozens of Topshop, Burton, Dorothy Perkins, Miss Selfridge, Wallis and Evans stores across the UK.
However, the group could face a battle to convince landlords to vote any proposal through amid growing criticism of the CVA process. Arcadia would require the backing of 75% of its creditor base in order to press ahead with the controversial restructuring plan.
The group has drafted in Deloitte and property consultancy GCW to help it draw up proposals.
Profit slump
Arcadia is stepping up plans to radically reshape its property portfolio after operating profits slumped 42% to £124m in the year to August 2017.
They are thought to have fallen further in the 2017/18 financial year, but Arcadia is yet to file those documents at Companies House.
A source told the Sunday Times: “If the landlords all come back and say ‘this is crap’, they’ll have to make it 20%. It does look like a recognition of the fact they need something to sweeten the deal because otherwise they’re going to struggle.
“It would be tied to a sale — otherwise where is the cash coming from? He [Green] will have to step away, then there’ll be a new management team and a CVA. Then it’s logical to conclude that one of the things on their decision tree is they wrap it up and someone buys it after all this has been sorted out.”
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