Arcadia may sell its international stores as part of its restructuring

Sir Philip Green's Arcadia empire may sell its international stores – most of which are said to be loss-making – as part of its forthcoming restructure.

The group is attempting to negotiate terms for a CVA with its creditors and landlords but has been meeting with resistance from landlords, who have been demanding tougher terms including a greater cash injection from Sir Philip (who has pledged a £100m loan) and a larger equity stake in the business.

It is reported that landlords have been offered up to 10% of the business, which could be realised in the event of a sale, but have been demanding more.

The CVA, which may be announced as early at this week, attempts to facilitate around 50 store closures, rent reductions and a cut in pension contributions. However, The Sunday Times reports that its international presence could also be cut.

Most of Arcadia's international stores are run on a franchise basis or are concessions, and it is said to be unlikely they would attract a buyer given that the stores are leased.

Only Topshop stores in Ireland, France, Germany, the Netherlands, the US and Australia are directly operated by Arcadia. In the US, there are 11 standalone stores, along with concessions in department store Nordstrom, and just two stores in Australia.

Arcadia is facing particular difficulty agreeing terms for its CVA in part due to the prevalence of CVAs on the high street (New Look, Debenhams and Mothercare are trading under CVAs and Select's CVA recently failed sending the company into administration), but also due to the hefty dividends the Green family has extracted from the company in the past, including £1.2bn in 2005.

One property source told The Guardian that Green's name was "toxic". “I think Arcadia is easily going to be the most controversial [CVA deal] because of the scale of the business, the behaviour of the owner and the impact on local communities,” the source said.

According to The Sunday Times Arcadia’s group sales fell 10.5% to £1.7bn in the year to August 2018, though the figures have yet to be filed at Companies House. Last week the newspaper's Rich List compilers deemed Sir Philip's holding in Arcadia to be worthless, given its pension deficit, and placed his wealth at just under £1bn, meaning he could not claim to be a billionaire for the first time in 17 years.

In order to address the pension deficit Green has offered to hand over the flagship Topshop Oxford Circus building to the fund, as well as reducing pension contributions from £50m per annum to £25m, but the store is heavily mortgaged and trustees are said to be pushing for an improved offer.