The future of Philip Green’s retail empire hangs in the balance after a major landlord confirmed it would not back a revised deal to be put to creditors on Wednesday.
Sources close to Intu, the owner of the Trafford Centre in Greater Manchester and the Metrocentre in Gateshead, said it was not prepared to accept rent cuts averaging 40% across Arcadia Group shops in its centres.
Arcadia, which has 570 shops, including Topshop, Topman, Dorothy Perkins, Burton, Miss Selfridge, Evans, Wallis and Outfit, was forced to postpone a vote on a rescue restructure last week.
If the restructuring does not go ahead, Arcadia is expected to go into administration, putting 18,000 jobs at risk.
The meeting was adjourned when it emerged that key landlords including Intu, M&G, Aviva and Land Securities were minded to vote against the plan, which involves the closures of 23 shops and rent cuts on nearly 200. Aberdeen Standard and the Crown Estate are also thought to have been against the plan.
If the restructuring is to go ahead, landlords accounting for at least half the rents owed by Arcadia must vote in favour of the plan, which involves seven insolvency processes known as company voluntary arrangements (CVAs).
In an attempt to win over detractors, the Green family has offered to put in about £9.5m a year for three years so that rent cuts can be trimmed back to 25%-50% from the 30%-70% initially asked for.
A source close to Intu, which accounts for about 15% of the landlords’ vote, said: “Arcadia is asking for a significant discount on valuable space, and Intu is not prepared to give way. Intu wants to create a fair environment for all its retailers and taking a huge haircut from one of them is not fair.”
Sources at another major landlord said they did not think the revised offer was enough and that there was a strong chance the deal would fail.
“There was no consultation before [the new deal was put out]. It was ‘that’s it and we’re off’ … It feels pretty close,” the source said.
Property sources added that large landlords, including Intu, were also wary of new contracts with some retailers, such as Next, which have said they will not pay more than the lowest-paying tenant.
Such deals could mean that any rent cuts agreed with Arcadia would be felt more widely across the retail sector.