On the go: All seven of Arcadia’s company voluntary arrangements have been approved by the required majority of the retailer’s creditors.
Arcadia's proposals needed the backing of at least 75 per cent of creditors. The outcome of the vote, which took place on Wednesday, has saved the company from administration.
To further support Arcadia’s defined benefit pension schemes, the group has reached an agreement with the trustees, the Pension Protection Fund and the Pensions Regulator, to decrease its deficit repair contributions to £25m from £50m per year, for three years, with security granted to the value of £210m over certain assets of the company.
Lady Tina Green, the group’s majority shareholder, will inject an additional £100m into the pension funds to help plug the shortfall, with funding of £25m per year for the next three years plus an additional £25m contribution.
She will invest £50m of equity into the company, in addition to the £50m of funding provided earlier this year, and she has agreed to fund the cost of the amended rental reduction terms within the CVA proposals announced earlier this month.
The deal saves the Arcadia schemes from the Pension Protection Fund for the moment along with a large injection of funding, but all eyes are on the retailer's next steps in relation to the scheme.
The Work and Pensions Committee asked for the Greens to provide a binding promise that pensioners will get their full entitlement, and is asking further questions of both the regulator and Arcadia's owner.
Frank Field, chair of the committee, said: “Now that, thankfully, Arcadia’s life has been extended, the Committee will try to ensure that the Pensions Regulator gets an effective programme in place to ensure that Arcadia staff receive in full the pensions that Sir Philip and Lady Green have promised them.”
Meanwhile the Pension Superfund, the DB consolidator believed to be in talks with Arcadia over a transfer of liabilities, welcomed the outcome and played up the possibility of a deal.
Luke Webster, the CEO of The Pension SuperFund, said: "This sees the Arcadia schemes being improved by a combination of a promise to pay £75m from Arcadia and £100m from Lady Green in cash over a number of years and £210m in security over, as yet unspecified, assets. These numbers and the approach by the regulator start to bring Arcadia into the scope of The Pension SuperFund."
Mr Webster continued: "Now that the Company Voluntary Arrangements have been approved by creditors, we standby to assist the Arcadia pension scheme trustees to deliver scheme members into a safe harbour where we believe there could be a better outcome for all.”
