The European Union has approved the takeover of iconic Irish department store Arnotts by its banks.
State-owned Anglo Irish Bank and Ulster Bank – which is owned by the Royal Bank of Scotland – have taken control of the business following a restructuring which began in February when the banks drafted in specialists Palladin Capital Group to decide Arnotts’ future.
In a joint statement, the banks said a board meeting would be held “shortly”, at which Mark Schwartz, Palladin Capital Group chief executive, is expected to become responsible for overseeing the management of the business.
“While there has been understandable concern in recent days about the future of Arnotts, I wish to reassure our staff, suppliers and customers that this great institution will continue to play a leading role in the Irish retail market”
Mark Schwartz, chief executive, Palladin Capital Group
It is unclear whether current management, headed up by chief executive David Riddiford, will remain at the retailer.
The banks reiterated their commitment to the retailer: “[The banks] will not be involved in the management of the company but are taking the necessary steps to ensure that the company will be run by experienced professionals in the best long term interests of the staff, suppliers and importantly, its customers.”
The statement continued: “Mr Schwartz and his team have been working closely with the banks and the company for the last five months. They have a strong track record in leading retail organisations and will bring the right management and operational skills to the development and growth of this iconic business.”
The future of Arnotts hung in the balance following an ill-fated decision by the business to back the redevelopment of the Northern Quarter in Dublin. The development was mothballed as the recession bit in the Republic of Ireland and left the business owing €250m to its banks.
The takeover has written down the property part of the Arnotts business and wiped out the shareholding held by chairman Richard Nesbitt and his family. Last week, Riddiford told suppliers and customers that the business was in rude health.
Schwartz said: “While there has been understandable concern in recent days about the future of Arnotts, I wish to reassure our staff, suppliers and customers that this great institution will continue to play a leading role in the Irish retail market.
“I appreciate the support received from the banks. They understand that our job is to focus on the future and build on what already has been achieved in creating a dynamic retail organisation anchoring Henry Street.
“Arnotts is a tremendous business and we need to continue to enhance the shopping experience for our longstanding customers. Our goal is to focus on the future, work closely with our strong staff and our suppliers, and create the conditions which will enable Arnotts to thrive for many years to come.”