Philip Green's Arcadia rejects £50m loan offer from Frasers Group

Frasers Group, formerly Sports Direct, confirmed on Monday that Philip Green’s Arcadia retail group has rejected its offer of a lifeline loan of up to £50m.

The company said it was not given any reasons for the rejection, nor did it have any engagement from Arcadia before the loan was declined.

Earlier in the day and in response to weekend press speculation, Frasers confirmed that it had offered the loan to Topshop owner Arcadia, which is on the verge of collapse.

It said that should efforts to agree an emergency funding package fail and Arcadia fell into administration, Frasers "would be interested in participating in any sale process".

Green's retail empire, which also includes Burton and Dorothy Perkins, is expected to collapse and enter administration on Monday, putting 13,000 jobs at risk after talks last week to secure extra funding failed. The group needed the extra cash to help cover the cost of lost sales during the Covid-19 pandemic.

Frasers wrote to Arcadia on Sunday saying it would offer an emergency loan of up to £50m to help with the group's short-term cash-flow problems.

"Our offer would allow you to retain employment for many thousands of your staff, reopen hundreds of stores when the current lockdown ends, and protect the financial positions of thousands of members in your pension schemes," a letter addressed to Arcadia Group executives stated, the BBC reported.

The letter also said that the Frasers would consider giving out the emergency cash on an unsecured basis - meaning Arcadia would not need to put up collateral, such as property, to guarantee it would be paid back.

Former billionaire Green has been urged to help plug an estimated £350m hole in the company's pension fund.

Hargreaves Lansdown analyst Susannah Streeter said if Arcadia Group did fall into administration Frasers was "expected to go picking over the carcass, potentially to give a new lease of life to brands like Top Shop or Miss Selfridge".

"But Mike Ashley has already been on an expansion drive this year, buying into Hugo Boss and increasing the company’s stake in Mulberry, so there is some concern about whether Frasers Group can afford to go on another shopping spree right now."

Online rival Boohoo was also suggested as another potential suitor for some of Arcadia’s brands, "which would take them online only, if its advances were to be accepted", Streeter added.

"Given the accelerated shift to digital brought about by the pandemic, the surival of iconic brands like Top Shop is going to rely heavily on improving its e-commerce offering, to enable them to stand a chance in the highly competitive online fashion world.’’