Arcadia creditors have approved all seven of the group’s company voluntary arrangement (CVA) proposals.
The group’s majority shareholder, Lady Green, will invest a further £50m of equity into Arcadia if the CVAs remain unchallenged, in addition to the £50m of funding already provided in March.
Lady Green has also agreed to fund the cost of the amended rental reduction terms within the CVA proposals, as announced on 7 June.
Separately, the group has reached an agreement with the trustees of the pension schemes, the Pensions Regulator and the Pension Protection Fund, to reduce its deficit repair contributions from £50m to £25m per year, for three years, with security granted to the value of £210m over certain assets of the group.
As previously announced, Lady Green will provide an additional £100m of cash into the schemes to help bridge the shortfall, with funding of £25m per year for the next three years, plus an additional £25m contribution.
The creditors first met on 5 June to vote on the CVA proposals, but Arcadia was forced to reconvene the meeting to give it time to “conduct further dialogue with a few landlords”, after it became obvious that not all of the CVAs would be approved.
In a bid to win landlord support, Arcadia then reduced the level of rent reductions required under the CVAs.
Previously, the group had requested a reduction of between 30% and 70% across 194 of its 566 UK and Irish stores over a three-year period. This was revised to between 25% and 50%. Lady Green offered to make up the shortfall – expected to amount to £9.5m in the first year.
Under the terms of the CVAs, Arcadia will close 23 out of its UK and Irish stores.
Alongside the CVA, Arcadia plans to put two subsidiaries into administration, resulting in a further 25 store closures. Six Miss Selfridge stores and 19 Evans stores will also be affected by the expected administrations of both property companies.
The rest of its stores will remain open and trading as normal, and the group’s online sales channels “will be completely unaffected by the proposed changes”.
The group will also close all eleven Topshop Topman stores in the US.
Ian Grabiner, CEO of Arcadia Group, said: “We are extremely grateful to our creditors for supporting these proposals and to Lady Green for her continued support. After many months of engaging with all our key stakeholders, taking on board their feedback, and sharing our turnaround plans, the future of Arcadia, our thousands of colleagues, and our extensive supplier base is now on a much firmer footing.
“From today, with the right structure in place to reduce our cost base and create a stable financial platform for the Group, we can execute our business turnaround plan to drive growth through our digital and wholesale channels, while ensuring our store portfolio remains at the heart of our customer offer.
“I am confident about the future of Arcadia and our ability to provide our customers with the very best multi-channel experience, deliver the fashion trends that they demand, and ultimately inspire a renewed loyalty to our brands that will support the long-term growth of our business.
“Finally, I would like to thank all of our team and advisors for their support throughout the CVA process. It has been incredibly challenging for all concerned but I believe this is the right outcome for all our creditors.”