Survival plan includes dozens of store closures and cuts to pension fund payments
Sir Philip Green’s Arcadia empire has bought back a 25% stake in its Topshop chain from a US private equity firm, as it paves the way for a survival plan that involves closing stores and cutting payments to its pension fund.
Leonard Green & Partners bought the stake in Topshop and Topman for a reported £350m in 2012. But by 2017 it had written the value of the investment down to nil, suggesting Arcadia did not have to pay to take the stake back this week. Arcadia declined to comment.
The deal is expected to clear the way for Arcadia to push ahead with the closure of dozens of stores via a company voluntary arrangement (CVA), a form of insolvency that has been used by other retailers including New Look, Mothercare and Carpetright to downsize in the past 18 months.
Frank Field, chair of parliament’s work and pensions select committee, published documents on Wednesday that show Arcadia’s pension deficit stood at £727m last year, on the basis that the retail group continued trading.
Field, who publicly lobbied for Green to pay millions into the BHS pension fund after the department store collapsed with a significant deficit, made clear he would be just as active over the Arcadia scheme.
“Does he really think he’s going to get away with his old tricks again? Not if we have anything to do with it,” the independent MP said.
One source said Green, whose family took a £1.2bn dividend from Arcadia in 2005, had agreed to plough £100m in cash into revamping stores and rebuilding his brands – which include Miss Selfridge, Dorothy Perkins, Burton and Wallis – as part of the plan. He has also reportedly offered landlords a stake in the business in return for backing a restructure.
The investment is dependent on landlords agreeing to rent cuts and the closure of about 50 of the group’s 570-plus stores via a CVA.
Arcadia’s advisers at the accountancy firm Deloitte have been presenting the deal to major landlords over the past few weeks in the hope of announcing firm plans early next month.
The billionaire’s retail empire has seen sales slide as it struggles against online competition from Asos and Boohoo, while shoppers have switched from buying clothes to other pursuits.
Leonard Green & Partners confirmed in a statement that it had sold its stake in Topshop/Topman (TSTM). “The transfer simplifies the shareholding structure of TSTM and enables the Arcadia board to focus on the restructuring options currently being considered. Leonard Green remains supportive of the business and has the opportunity to repurchase its stake in TSTM in the future,” the statement said.