Arcadia gets lender support as it works towards restructuring

By

Sandra Halliday

Published
Apr 29, 2019

Topshop owner Arcadia is believed to have struck a deal (or to be about to) with banking giant HSBC for the latter to act as a guarantor of its ability to pay its suppliers as it works towards its financial restructuring, which some analysts expect to happen as soon as this week.

The deal would extend an existing agreement and give the fashion retail giant breathing space after it had seen suppliers having credit insurance cut or withdrawn, newspaper reports said.

City sources said that it’s an unusual move but one that would soothe supplier concerns after the company had been forced to pay certain bills in advance because of the credit insurance issue.

Neither Arcadia nor HSBC have commented on the reports, but one newspaper said that sources close to the fashion retailer have played down the new agreement’s significance.

Yet there’s no denying that it comes at an extremely significant time for the organisation as it heads towards an expected CVA. 

Arcadia currently operates 570 shops under its Topshop/Topman, Miss Selfridges Evans, Wallis, Outfit, Burton and DorothyPerkins banners and is believed to be still speaking to landlords about a CVA that would see it closing some of those shops and striking more favourable deals on its rent bill.

The company is targeting at least 25 closures (having shut more than 200 over three years) but rent reductions on a large number of others would be needed for it to achieve its aim of making major annual savings.

Industry watchers are expecting an imminent announcement of a CVA by the business, which would require 75% of creditors to vote in its favour and analysts have said that any deal with HSBC would be part of an attempt to win supplier support for the CVA process. Earlier reports also suggested that Arcadia has offered landlords a stake of around 10% in the company itself in exchange for their support.