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Landlords seek 30% equity in Monsoon

Landlords are seeking up to a 30% equity stake in Monsoon in return for backing any company voluntary arrangement (CVA) proposals, Drapers has learned.

The retailer put its long-awaited restructuring plans on hold earlier this month as it awaited the outcome of Arcadia’s CVA, which offered 20% equity to landlords. The latter was given the green light on Wednesday.

Last month, it was reported that landlords including British Land, Hammerson, M&G Investments and Roubaix Group were negotiating an equity stake with Monsoon owner Peter Simon in the hopes of securing improved terms in a proposed CVA. The four landlords are understood to own around 10% of the 268 units occupied by Monsoon Accessorize.

One property agent said: “[Monsoon has] delayed doing any CVA because they were awaiting outcome of Arcadia. There was concern that if Arcadia hit the buffers they would also not have seen their own CVA pass. The fact that Green was willing to give 20% of equity to the landlord pool [for the Arcadia CVA] has changed the dynamic [of Monsoon’s CVA].”

It is understood the amount of equity up for grabs in Monsoon is still under discussion, but landlords are pushing for 30%.

Monsoon Accessorize appointed consultancy firm Deloitte in April to look at options to reduce overall costs as it restructures the business in the UK and internationally. Owner Simon said he would inject a £34m lifeline into the struggling business if landlords agree to the rent cuts.

Sources said landlords were likely to be more sympathetic to Monsoon than they were with Arcadia. 

One landlord told Drapers: “Monsoon is his [Simon’s] baby. He created it from nothing, which is very different to [Arcadia chairman Sir] Philip Green. I understand they [Monsoon] have been nervous about how landlords reacted [to Arcadia] so he [Simon] wanted to get it right.”

However, one property agent said: “The Arcadia CVA was seminal for the industry and it draws a line under what is allowed. It shows that as long as certain terms are met landlords will back a CVA even if a business isn’t in immediate trouble and has wealthy backers.

“Landlords will now say ‘Well, if we are going to back it [a CVA] in return we want equity in Monsoon’, the level would be around 30%.”

Another landlord said he felt a Monsoon CVA was inevitable either way: “Sometimes you get to a stage where it’s like herding cats. You have so many different landlords, and even though every landlord has sympathy, the CVA is the only method to legally corral them into a single viewpoint.”

Monsoon declined to comment. 

 

 

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