UK retailer Arcadia rejects emergency loan offer
BRITISH clothing retail group Arcadia, ravaged by coronavirus lockdowns and fierce online competition, on Monday rejected an emergency loan offer, even as it teeters on the brink of bankruptcy.
Some 13,000 jobs are at risk at the company’s flagship stores including Topship, Topman, Dorothy Perkins, Burton, Miss Selfridge, Evans and Wallis.
British media reported the group was poised to enter administration, in what would be another body blow to Arcadia boss Philip Green and the Covid-hit British retail sector.
Green, 68, who was once dubbed “the king of the high street”, saw his reputation hit from the high-profile collapse of retailer BHS four years ago.
His bricks and mortar businesses has also suffered from increasing online competition from the likes of Boohoo and Asos.
But Arcadia turned down a 50-million ( 67-million, 56-million-euro) loan from British sportswear tycoon Mike Ashley’s Frasers Group to stave off bankruptcy.
“Frasers Group can confirm that Arcadia Group Limited have declined Frasers Group’s offer of a lifeline loan
of up to 50m,” it said in a statement to the London Stock Exchange.
“Frasers Group were not given any reasons for the rejection, nor did Frasers Group have any engagement from Arcadia before the loan was declined.”
Ashley, who also owns English Premier League side Newcastle United, bought the troubled department store chain House of Fraser in 2018 and runs the Sports Direct brand of shops.
Frasers had earlier said it
“would be interested in participating in any sale process” should Arcadia fail to secure emergency funding and go into administration.
Arcadia announced on Friday that the Covid-19 pandemic has had a “material impact” on trading due to enforced closures during lockdowns that have devastated retail across Britain.
It said it was working on “a number of contingency options” to secure the future of its brands.
- Pension scheme -Back in
2015, Green sold retailer BHS for just 1 to Dominic Chappell, a former bankrupt businessman with no retail experience.
BHS then collapsed one year later, resulting in 11,000 job losses and leaving a massive 571-million deficit in its pension fund.
British lawmakers on Monday called on Monacobased Green to cover the shortfall in the Arcadia pension fund, which is estimated to run as high as 350 million.
The head of parliament’s cross-party Work and Pensions Committee, Stephen Timms, said Green should dip into his own pocket to ensure workers do not miss out.
“There is unquestionably a moral case for the Green family to do the right thing and guarantee Arcadia’s hardworking staff what is rightfully theirs, whatever happens this Christmas,” he said.
Timms also said the pensions regulator should “do everything in its power to fight the corner of the pension scheme members”.
Green, who net worth was estimated at 930 million on this year’s Sunday Times Rich List, last year paid 363 million to plug the gap in the BHS pension scheme.
The human fallout of the global pandemic has seen more than 58,000 deaths from some 1.6 million cases in Britain -- the worst in Europe.
The economic consequences also threaten to be dire. Last week, finance minister Rishi Sunak said the economy was set to contract 11.3 percent this year -- the worst in over 300 years.
A three-month shutdown from late March forced nonessential retailers to close but even as businesses reopened from une, town and city centres remained virtually deserted.