Future of Philip Green's Arcadia in balance as landlords vote on deal
The future of Philip Green’s Arcadia retail empire and 18,000 workers lay in the hands of landlords set to vote on a rescue package for the struggling group.
The group of creditors was meeting in London on Wednesday to decide whether to accept the deal. A vote was last week postponed dramatically when it became clear that property owners were refusing to bow to Green's demands they take a rent cut or he would place Arcadia into administration.
Green is seeking seven Company Voluntary Agreements (CVA) and last week was asking for rent cuts of up to 70% on 200 stores in return for small stakes in his business. Under new terms the requested cuts have fallen to 25% - 50%.
There was no guarantee of the revised deal winning over creditors. Major UK shopping centre owner Intu, which owns 35 Arcadia stores, said it would be voting against the deal, which also includes the closure of 50 stores.
However, the Crown Estate, which manages property assets for Britain's royal family, said it would be voting in favour.
“While we have voted in favour, we have done so to secure our ability to take control where we feel that a better offer can be delivered for our destinations," it said in a statement.
"This may include re-letting our spaces to new retailers who are more aligned with our ongoing commitment to creating great places for local communities.”
Many landlords fear other tenants will demand similar terms in a High Street environment that is struggling to cope with increased internet shopping, lower footfall, and depressed consumer spending caused by Brexit.
They are also reluctant to give in to Green when he is travelling the Mediterranean on his £100m boat Lionheart with wife Tina, technically the owner of the embattled retail chain.
Their decision to take a £1.2bn dividend from the business in 2005 has not won admirers among property owners either.
However, the other side of the coin for landlords is risking the collapse of Arcadia, with empty stores and no rental income in a tough trading environment, something Green hopes will swing votes his way. He needs 75% of creditors to accept the deal for it to go through.
One landlord told the Press Association news agency the Arcadia CVA plans were different to those from sector peers House of Fraser or Debenhams because their smaller units would be easier to fill with new tenants.
"There was some sympathy for Debenhams," the PA cited the unnamed landlord as saying.
"Whereas here you’ve got a bigger pool of potential tenants. You’ve got more options so it’s easier to vote against it. Not that many people are that emotional about it - there’s no tears for Philip Green."