Arcadia CVA on knife edge as Intu rejects revised deal

A source close to Intu savaged the rent reduction compromises put forward by Arcadia last week – whereby the retailer offered to reduce rent cuts from 70% to 50% and reductions on other properties from 30% down to 25% – as “not in the interests of tenants or shareholders”.

Intu operates 35 Arcadia units, 70% of which are either Topshop or Topman, and has a 15% vote share in at least two of the seven CVAs that are still to pass.

The source said Intu had eight of the UK’s top 20 shopping centres and footfall numbers at those schemes were bucking the downward trends seen across the country.

“This is valuable, desirable space, which Intu is not in the business of just giving away at a massive discount,” they said. “It doesn’t need to as there’s significant demand. It makes no sense to agree to this and the feeling is Intu would get a better outcome from an Arcadia administration”.

However, a source close to Arcadia – which owns brands including Topshop, Burton and Miss Selfridge – said the embattled retail chain was still hopeful of agreeing a deal before the second round of voting on the CVA takes place.

“Arcadia wouldn’t take it to a vote tomorrow if it wasn’t hopeful of getting it over the line,” the source said. “It would have pulled the plug and gone into administration instead.”

Retail Week understands both Hammerson and British Land will vote in favour of the CVA, while Land Securities is likely to have been swayed to vote in favour by the concessions offered.

One source close to the discussions said of Land Sec’s position that Arcadia was “very close to bridging the gap” and the concessions had “resonated and addressed quite a few concerns”.

As has been widely reported, a number of the institutional landlords and asset managers, such as M&G and Aviva, also need to be won over by Arcadia to ensure the smooth passage of the CVA proposals.

The source said: “Arcadia have made some good headway there and I reckon they’ll come around.”

The second CVA vote is scheduled to take place from midday tomorrow, after Arcadia was forced to postpone the first vote last week after at least two of its seven connected CVAs failed to garner the necessary 75% of support required to pass.

Given the interconnected nature of the business, all seven CVAs need to pass or else the group will collapse into administration, putting around 18,000 jobs at risk.