Sir Philip Green’s advisers are reportedly considering offering landlords Arcadia Group shares of up to 20%, to win over their support for a restructuring of his struggling empire.
Sources close to the situation said Green could be about to offer landlords between 10% and 20% in shares to encourage them to vote for the deal, The Sunday Times has reported.
It comes after it was announced last month that Green wants to close a tranche of Arcadia’s 570 shops, possibly via a company voluntary arrangement (CVA), and cut rents by an average of 30% on the rest.
Arcadia could also offer landlords a lump sum “totalling tens of millions of pounds” to match the amount they would receive in an administration.
Meanwhile, it has emerged that five of the 10 pension trustees at Arcadia are also employees at the retailer, the Daily Telegraph has reported. The arrangement has been called into question because they have to approve any restructuring plans the Arcadia Group proposes.
Frank Field, chairman of the work and pensions committee, told the Daily Telegraph: “We have said that it is an undesirable state of affairs, and pension trustees must be independent and for them to be separate to the rest of the business.”
An Arcadia spokesman said: “The structure of the AGPS trustee board is in line with good practice and its composition reflects that of many other trustee boards.
“The trustee board acts independently of the company and also has its own independent professional advisers who advise only the trustees, not the company.”
Last week it was revealed that the group had drawn up a list of 67 stores that it no longer wishes to operate. Advisers are approaching potential occupiers to take over the leases.
The stores proposed for closure cost Arcadia about £11m in annual rent. They range from locations in local high streets to shopping centres including Intu Merry Hill in the West Midlands and Intu Metrocentre in Gateshead.
Last month, the group appointed property consultancy GCW to work with Deloitte on restructuring the business.
It is increasingly likely that Arcadia will enter a company voluntary arrangement to offload some of its store portfolio. However, property sources told Drapers that landlords were reluctant to negotiate with Arcadia following years of tough rent negotiations.
Sir Philip Green’s retail group is thought to have around 200 store leases coming up for renewal in the next two years.
Arcardia’s fascias include Burton, Topshop, Evans, Dorothy Perkins, Miss Selfridge and Wallis. It currently has 570 UK shops. Arcadia has reportedly closed 210 shops over the last two years – around one-fifth of its store portfolio. Earlier this month the retail group said it would not close a “significant” number of stores as part of its restructuring.
Deloitte and GCW declined to comment.