File photo dated 17/09/17 of Sir Philip Green, who has been charged with four counts of misdemeanour assault in the US after a Pilates instructor alleged the Arcadia mogul repeatedly touched her inappropriately. PRESS ASSOCIATION Photo. Issue date: Friday May 31, 2019. Katie Surridge told police in Arizona that Sir Philip spanked and grabbed her backside during classes in the Canyon Ranch luxury resort in Tucson in 2016 and 2018. See PA story POLICE Green. Photo credit should read: Isabel Infantes/PA Wire
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Philip Green and his wife have agreed to provide up to £30m of additional funding to cushion the impact of proposed rent reductions on landlords, in the latest attempt to secure their support for a controversial restructuring of his Arcadia fashion empire.

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, which include branches of Topshop, Burton, Wallis, Miss Selfridge and Dorothy Perkins. 

The rent cuts are part of a company voluntary arrangement, an insolvency mechanism designed to allow companies to restructure their financial liabilities.

Under the proposed amendment revealed on Friday, the landlords who would have suffered a 70 per cent reduction will have that lowered to 50 per cent, while those who had been asked to drop by 30 per cent will have to cut by 25 per cent.

Arcadia will pay rents according to the original CVA schedule, with the difference topped up by payments direct from Sir Philip and Lady Tina, the ultimate owner of Arcadia. 

On Wednesday, Sir Philip suffered a setback when a creditor meeting called to approve the proposals had to be adjourned. An unknown number of the seven separate CVAs failed to reach the 75 per cent threshold required for approval. 

Arcadia won the support of big landlords such as British Land and Hammerson, according to people briefed on their votes, but was unable to convince others such as Land Securities, Intu, Aberdeen Standard and Aviva, while smaller landlords were also divided on whether to back the plans. 

The main sticking points, as reported by the Financial Times on Thursday, were the extent of the rent cuts demanded and the short lease breaks. Landlords are also concerned that other tenants will demand reduced rents if they are granted to Arcadia group stores.

“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,” said Ian Grabiner, Arcadia’s chief executive. 

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.

If the latest proposals are accepted, the total personal cost to the Greens of rescuing Arcadia will be almost £180m, not including a £50m loan that Lady Tina has also extended to the group. Some landlords still compare that sum unfavourably to the billions extracted from Arcadia in dividends and other payments since the Greens acquired it in 2002.

People briefed on the changes said landlords would be given more time to find alternative tenants before they exercised break clauses. The current CVA allows a landlord to serve notice on a tenant for up to 180 days after the CVA comes into effect, but that will now be extended to 270 days. 

Creditors are set to reconvene next week to vote again on the proposals. The company has already warned in stark terms that it faces administration — and the possible loss of up to 18,000 jobs — if the proposals are not approved. 

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