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Last-minute rescue deal for Arcadia Group reportedly falls through

Lauretta Roberts
30 November 2020

Plans for an emergency multimillion-pound loan from lenders to Sir Philip Green’s struggling Arcadia Group have reportedly fallen through.

Sir Philip’s retail empire, which includes the Topshop, Dorothy Perkins, Walis, Evans and Burton brands, has been revealed to be on the brink of collapse with around 13,000 jobs at risk and could be placed into administration today.

Senior sources at the company have told the BBC they do not expect a last-minute rescue deal to be secured, however it emerged over the weekend that Mike Ashley's Frasers Group, which runs Sports Direct and House of Fraser, has offered the business a £50m secured loan.

Frasers Group confirmed the loan offer in a statement: “The company can confirm that it has made an offer and provided draft terms to the Arcadia Group for a loan of up to £50 million and is now awaiting a substantive response.

“Should the Company and the Arcadia Group’s efforts to agree an emergency funding package fail and the Arcadia Group enter into administration, the company would be interested in participating in any sale process.”

Sky News quoted Chris Wootton, Frasers’ chief financial officer, as saying: “We hope that Sir Philip Green and the Arcadia Group will contact us today to discuss how we can support them and help save as many jobs as possible.”

Arcadia had been in emergency talks with lenders in a bid to secure a £30m loan to help shore up its finances.

If the insolvency is confirmed, it is expected to trigger a scramble among creditors to get control of company assets.

Arcadia operates more than 500 retail stores across the UK with the majority of these currently shut as a result of England’s second national lockdown, which will end this week.

Earlier this year, the group revealed plans to cut around 500 of its 2,500 head office jobs amid a restructure in the face of the coronavirus crisis.

Should the business fail, likely contenders to buy some or all of its brands include Frasers and Boohoo Group – which has already picked up Oasis and Warehouse from liquidators during the crisis – with Next also viewed as a possibility.

The knock-on effect of a potential collapse of Arcadia is also said to have destabilised JD Sports' deal to acquire ailing department store chain Debenhams. Arcadia operates numerous concessions across Debenhams and is said to turn over £100m across the chain. Reports over the weekend say JD has now cooled on the idea of buying Debenhams, having initially been attracted by its valuable online business and some of its prime retail locations.

That move raises the possibility that Frasers, which previously walked away from the Debenhams sale process, may yet renew its interest.

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