Sir Philip Green’s Dorothy Perkins-to-TopShop empire is racing to raise tens of millions of pounds to secure its immediate future as the coronavirus maelstrom wreaks havoc across Britain’s high streets.
Sky News has learnt that Arcadia Group has approached banks and hedge funds about borrowing roughly £50m against its distribution centre in Daventry, Northamptonshire.
The new funding would be used to help see Arcadia through a period in which all 550 of its shops are closed because of the COVID-19 pandemic.
One of the potential lenders approached about the plan said that the company had signalled a desire to agree a deal as quickly as possible.
The Daventry site, which opened last year, is a central part of TopShop’s logistics operations.
It is owned by Arcadia, but Lady Green, Sir Philip’s wife and the company’s ultimate owner, has security over it.
Lady Green is understood to have agreed as part of a financial restructuring last year to subordinate her debt position, in order to allow Arcadia to borrow against it.
It was unclear on Wednesday night whether an imminent deal with a new lender was likely.
Arcadia is said to be planning to hold a routine board meeting on Thursday to discuss the impact of the coronavirus outbreak on the company.
Last week, it said it would furlough 14,500 employees under the government’s emergency job retention scheme.
Sir Philip’s empire, which came close to collapse last year, faces a significant financial hit if Debenhams collapses into administration in the coming days, because of the extensive concession operations it has there.
Arcadia has also been trying to conserve cash by withholding rent payments, and securing the agreement of its pension trustees to defer its £2m-a-month contributions to its retirement scheme.
A separate £25m contribution from Lady Green – agreed under the terms of last June’s company voluntary arrangement – is being paid on schedule.
Like many of its rivals, Arcadia saw catastrophic falls in sales across its brands even before the enforced closure of their stores.
Sir Philip’s businesses employ about 18,000 people, making his operations one of the UK’s largest privately owned employers.
Arcadia, which made billions of pounds for Sir Philip and his family, was already struggling before the coronavirus outbreak.
Under the CVA, the tycoon agreed to inject £175m in cash into Arcadia’s pension scheme it was also granted security over a further £210m of property and other assets.
In return, Arcadia signalled its intention to close dozens of stores and reduce rents at hundreds more.
Reports in the last few days have suggested that a substantial number of store closures may be accelerated as a result of the coronavirus outbreak.
As part of the reorganisation of his companies, Sir Philip paid $1 to buy back his private equity partner’s 25% stake in TopShop and Topman.
Like its rivals, Arcadia’s brands have been hit by shifting habits among shoppers and growing consumer caution.
It has been a tumultuous period for Sir Philip, who for years was feted as the king of the high street by politicians and the media but who struggled to recover his poise after the collapse in 2016 of BHS.
His sale of the department store chain a year earlier to Dominic Chappell, a former bankrupt, culminated in Sir Philip having to contribute more than £360m to fund its pension deficit after its collapse.
The tycoon’s miserable period has not only been restricted to the performance of his business.
He also became embroiled in a storm over his behaviour towards Arcadia employees and his use of non-disclosure agreements to prevent former workers discussing their severance packages.
Arcadia declined to comment.