The high street tycoon Sir Philip Green is to launch a make-or-break revamp of his Topshop empire that could see landlords handed a shareholding of more than one-third of the business.
Sky News understands that Sir Philip’s Arcadia Group is preparing to unveil a Company Voluntary Arrangement (CVA) restructuring by the end of the week – with an announcement possible as soon as Wednesday afternoon.
City sources said that Arcadia’s board was expected to press ahead with the plans despite continuing dissent from several stakeholders.
A statement is said to be likelier on Thursday or Friday given that some elements of the CVA remained unresolved on Wednesday morning.
Under its proposals, Arcadia – which owns the Burton, Dorothy Perkins and Miss Selfridge brands – would close dozens of stores, seek rent cuts at hundreds more and slash the contributions it makes each year to its pension scheme.
In return Sir Philip, who was this month stripped of his billionaire status by The Sunday Times Rich List, would provide more than £50m to the company.
The tycoon proposed doing so in the form of a secured loan, but other creditors are pushing him to inject it as equity, and to increase the amount of money he commits to Arcadia’s turnaround plan, according to insiders.
A group of the company’s landlords, including British Land and Hammerson, have requested that Arcadia’s store-owners collectively be handed a stake of at least 40% in the business.
It was unclear on Wednesday whether the company had agreed to this demand.
A CVA – a contentious insolvency mechanism used by dozens of struggling retailers, including Debenhams and Mothercare during the last year – would require the approval of at least three-quarters of Arcadia’s creditors by value.
If a series of votes to approve Arcadia’s restructuring is lost, the company is likely to launch an immediate sale process, failing which parts of or all of the business could face administration.
Under the plans CVA would involve closing fewer than 50 UK stores but would involve significant rent cuts across much of the rest of the estate.
Sky News revealed recently that Arcadia was also seeking to halve the annual contributions it makes to its employee pension scheme to £25m as it seeks ways to cut costs.
To mitigate that reduction, Arcadia would pledge the freehold of its Oxford Street store to the pension scheme, The Sunday Times has reported.
Both The Pensions Regulator – with whom Sir Philip fought a running battle in the aftermath of BHS’s collapse – and Arcadia’s pension trustees are understood to oppose that plan.
The discussions about Arcadia’s future are increasingly looking like the denouement to Sir Philip’s decades-long stint as a key player on the UK high street.
The tycoon, who paid $1 (76p) to buy back his private equity partner’s 25% stake in Topshop and Topman in April, has been remote from the negotiations about Arcadia’s future.
Ian Grabiner, the company’s chief executive, has been spearheading the talks, while Deloitte and an army of other professional advisers have been working on the CVA proposal.
A pair of corporate restructuring veterans have also been recruited to the company’s board.
Arcadia, which employs about 18,000 people, wants to replicate a restructuring path trodden by retailers such as Carpetright, Mothercare and New Look in the last two years as trading conditions on the high street have deteriorated.
The financial restructuring comes at a delicate time for Sir Philip, who has been embroiled in a storm over his behaviour towards Arcadia employees and his use of non-disclosure agreements to prevent former workers discussing their severance packages.
Arcadia declined to comment.