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June 11, 2019

Arcadia lowers rent reduction request ahead of CVA vote

Retailer Arcadia Group has revised its rent reductions to a range of between 25%-50% as opposed to previous proposals of 30%-70% ahead of this week's creditors meeting.

By Beth Wright

Retailer Arcadia Group has revised its rent reduction requests to between 25%-50% as opposed to previous demands of 30%-70% ahead of this week’s creditors meeting.

The retailer, which owns the Topshop, Topman, Miss Selfridge, Burton and Dorothy Perkins chains, last month announced plans for a number of company voluntary arrangements (CVA) to reach agreement with its creditors regarding repayment of its corporate debts.

A meeting with creditors was due to be held last week but was pushed back to allow Arcadia more time to liaise with landlords, with a view to securing a final decision on the seven CVAs. It will now be held this Wednesday (12 June).

The fashion group, which is owned by tycoon Sir Philip Green, has instigated seven CVAs that will see it close 23 out of its 566 UK and Irish trading locations. It is also restructuring its US operations, with the potential closure of all 11 Topshop Topman stores in America.

Previously, the group requested a reduction in rental costs of between 30%-70% across 194 locations over a three year period. This rental reduction has now been revised to between 25%-50% for all affected landlords across the seven CVAs. Landlords who have already voted to approve the CVAs will also benefit from these improved terms.

The cost of the amendment will be entirely funded by Sir Green’s wife, Lady Tina Green, the group’s ultimate owner. In the first year, the initial cost is expected to be about GBP9.5m.

“Having already secured the support of our pensions trustees, trade creditors and a significant number of landlords, we hope these final revised terms will ensure the majority of landlords support the CVA at next week’s vote,” Ian Grabiner, CEO of Arcadia, said. “Their support is vital for the long term sustainability of the group, our 18,000 employees and our extensive network of loyal suppliers.”

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