Sir Philip Green sweetens CVA deal for landlords

Sir Philip Green has agreed to plough a further £10m a year into Arcadia in a bid to secure support from landlords for the fashion chain's proposed CVA deal.

Arcadia was obliged to abandon a proposed vote on the CVA deal on 5 June after it became clear that it would not achieve sufficient support from landlords to get the deal through. Shopping centre operator Intu, M&G and Aviva were all said to have declined to back the deal.

Landlords are reported to have received new proposals today, which include a pledge from Lady Green for an extra £9.5m a year to offset the proposed rent cuts. In cases where landlords were originally asked to stomach a 70% rent reduction, this has been reduced to 50% with Arcadia paying 30% and the Green family paying 20%. Where rent reductions 30% were requested, this has been reduced to 25%.

It is expected that the total cost will be about £30 million over the next three years.

Ian Grabiner, chief executive of Arcadia, said: “Having already secured the support of our pensions trustees, trade creditors and a significant number of landlords, we hope these final revised terms will ensure the majority of landlords support the CVA at next week’s vote.

“Their support is vital for the long-term sustainability of the group, our 18,000 employees and our extensive network of loyal suppliers.”

Wednesday's vote on seven separate company voluntary arrangements (CVAs) was suspended at the last minute to give Arcadia more time to negotiate with landlords.

Votes had already been cast on the proposals, but many landlords opposed the changes, leaving the future of several retail brands and their 18,000 employees in doubt.

The meeting is due to reconvene on 12 June, when the CVAs which did not previously have enough support will be voted on again.

At least one CVA is understood to already have sufficient support after the Pensions Regulator (TPR) agreed fresh terms for protecting Arcadia’s pension fund.

But Sir Philip’s long-time critic Frank Field warned on Friday against repeating “mistakes of the past” as he questioned whether the current arrangements were enough.

In a letter to TPR the MP said there still appears to be a “substantial deficit” in Arcadia’s pension schemes.

On Tuesday, Arcadia agreed to back the schemes with an additional £25m in the form of asset security.

This was on top of the £75m which Lady Green had previously pledged to inject into the scheme, as well as £210m of asset securities. Arcadia will also pay £25m a year into the scheme over three years.

Field, who chairs parliament’s Work and Pensions Select Committee, said the adjournment of the CVA vote this week was a “useful opportunity for us all to reflect on the CVA proposals”.

“You will understand that, given our experience with BHS, we are very keen indeed not to see a repeat of the mistakes of the past,” he said.

He asked the pensions watchdog to provide further details of its agreement with Arcadia ahead of the next CVA meeting.

TPR said following the adjournment: “We will be working closely with the company, pension scheme trustees and the PPF to understand any changes to the CVA proposals and whether there are implications for the scheme to ensure members are properly protected.

“We will not be commenting further at this stage.”