Intu will, again, vote against Sir Philip Green’s rescue plans for his troubled Arcadia group, sources close to the retail landlord have told Property Week.
Intu’s position keeps the future of Green’s empire in the balance, with Arcadia now relying on other landlords including Landsec, M&G, Aviva and Aberdeen Standard to come over to his side to save the group from collapse and secure the future of its 18,000 staff.
Last Wednesday, Arcadia was forced to postpone its creditors’ meeting after failing to gain the 75% of votes required for all its proposals to pass.
A source familiar with Intu’s position on Arcadia’s cost-cutting proposals told Property Week that the landlord was not prepared to accept Green’s rent cuts, and “punish full rent paying and loyal tenants”.
“Arcadia had proposed reducing the rents on its 35 Intu stores by 50%, and then reduced the cut to 40%,” said the source. “Intu has informed Arcadia it was not prepared to accept these revised terms, and that it will take its chances with the administration, if it comes to that.”
The news will come as a blow to Green as Intu is Arcadia’s biggest landlord and controls 15% of the votes at tomorrow’s creditors’ meeting.
The meeting will see landlords, suppliers and the pension authorities vote on the seven company voluntary arrangements (CVA) across the brands, which include Topshop, Burton, Dorothy Perkins and Evans. Green requires 75% of the votes to pass the CVAs, and if M&G, Aviva, and Aberdeen Standard stick to their no votes from last week’s postponed meeting Arcadia’s survival could come down to Landsec, which is understood to still be considering its position.
The Intu source added: “Of Intu 35 Arcadia stores, 70% are Topshop, and the company is confident this brand would endure through an administration and would attract interest from a number of buyers.”
An Arcadia source close to Green attempted to take the moral high ground claiming the retail tycoon was doing all he could to save the jobs of Arcadia’s 18,000 jobs and that landlords voting against the CVAs would effectively be putting those people out of work.
“It’s down to the landlords now,” said the source. “We’ve done everything to save those 18,000 jobs. If they vote this down the landlords will be the ones putting those 18,000 people on the dole.”
However, the source at Intu fought back against such accusations saying it had the interests of far more workers at heart.
“Intu is responsible for the jobs of 100,000 people who work for its tenants, plus a further 30,000 associated jobs,” said the source. “We have to act in the interest of those 130,000 jobs, not just the 18,000 Arcadia jobs.”
Following last week’s failure to secure support for the restructuring plans, Green and his wife agreed to provide up to £30m of additional funding to lessen the impact of rent reductions on landlords
Arcadia said in a statement that the Greens would provide up to £10m a year over three years to offset cuts in rent demanded across 194 out of the mogul’s 500 UK stores.
Under the CVA amendments, the landlords who would have suffered a 70% reduction will have that lowered to 50%, while those who had been asked to drop by 30 per cent will have to cut by 25%.
The Greens have also agreed to make good Arcadia’s proposed reductions in pension contributions, at a cash cost of £75m, and contribute an additional £25m. Lady Tina will inject an additional £50m of equity, most of which will go towards funding a landlord compensation scheme.
The latest proposals bring the total personal cost to the Greens of rescuing Arcadia to almost £180m, not including a £50m loan that Lady Tina has also extended to the group.
Intu owns eight of the top 20 shopping centres in the UK, which host 400m visits a year. Yesterday it revealed a 1.1% rise in footfall in its centres, significantly better than the overall 3.5% fall in shoppers across the retail sector.The British Retail Consortium’s (BRC) monthly footfall tracker for May shows store visits hit a six-year low in May as cooler weather and the ongoing political uncertainty around Brexit deterred shoppers.
The BRC chief executive, Helen Dickinson, said the 3.5% decline recorded by its Springboard monthly footfall tracker was the worst since January 2013.