Sir Philip Green moved a step closer to rescuing his Arcadia retail empire last night by agreeing to put an extra £25 million into its retirement fund to secure backing from the Pensions Regulator for efforts to restructure the group.
The tycoon’s family has increased a proposed three-year funding package for the pension scheme to £385 million from an earlier offer of £360 million.
In a statement last night Arcadia said it had agreed to provide security for the schemes to the value of £210 million which includes an additional £25 million agreed with the regulator.
Lady Green will also provide contributions to the schemes totalling £100 million over three years, while Arcadia will also pay in £75 million over the period. Sir Philip is racing to avoid Arcadia collapsing into administration.
The group, which has a £750 million pension deficit, employs about 18,000 staff and is behind brands including Topshop, Burton, Dorothy Perkins and Miss Selfridge. It has come under pressure in recent years from other fast-fashion brands as more shoppers move online.
Creditors, many of whom are landlords, will vote today on a restructuring plan that would allow Arcadia to cut costs by closing some shops and slashing rents on others. Arcadia has warned that it is “highly likely” to fall into administration if the overhaul is not approved.
The restructuring is being implemented through seven company voluntary arrangements (CVAs), a form of insolvency that requires 75 per cent creditor approval. The Pension Protection Fund, a lifeboat for retirement schemes, will vote on behalf of the Arcadia pension trustees and has the power to block one of the company voluntary arrangements.
Last week the regulator demanded that Sir Philip’s family pledge an extra £50 million to the Arcadia pension fund.
The deal with the regulator has secured the Pension Protection Fund’s support for the CVA and will shift the focus of the votes on to Arcadia’s landlords, who are now left in a pivotal position to accept or reject the overhaul.
The restructuring would result in the closure of 23 of Arcadia’s 566 shops in Britain and Ireland, as well as the shutting of all 11 Topshops in the United States. Arcadia has identified a further 25 British shops it wants to axe.