IKEA To The Rescue? The Furniture Chain May Buy Topshop Billionaire’s London Store For $500 Million

The Topshop tycoon and billionaire, Sir Philip Green, will make $534 million by selling his iconic Oxford Street flagship to IKEA. It is trusted that this sale will be the last piece of the controversial bankruptcy of Arcadia Group.

Green, who is still struggling to pay off the enormous debts he accumulated from his Arcadia retail empire, is just $48 million shies of the reported $582 Million asking price in May.

Green can fully repay the $425 million Apollo Global Management-based mortgage by selling the property. The $109 million remainders will be used to satisfy a larger group of claims against Arcadia. Teneo reported that the total amount was $2.4 billion as of July.

Forbes reported last Wednesday that a second round had been received and is being reviewed. The bids were said “to exceed” the $425 million owed.

A spokesperson said that the property’s administrator, Redcastle, cannot confirm or deny the deal until finalized. IKEA did not wholly deny these reports. The spokesperson for IKEA stated to Forbes that while the Swedish furniture giant is “exploring” new places “as part” of a “new city center approach,” the company has no plans at the moment to share its expansion strategy.

IKEA is a store heavily dependent on customers driving to the shop and parking there. However, Nick Budd, a retail consultant, described IKEA’s reported bid for London property in London as a “smart decision.” He also said that the unit has ample room for pick up items like plates and plants. According to reports, Nike and Vans already have outlets in this building. They won’t be closing once IKEA comes in. IKEA already operates a smaller outlet, known as a “planning room,” on Tottenham Court Road. This area is well-known for its furniture stores.

Arcadia, the empire with 400 stores and 13,000 workers, including U.K. household brands like Topshop and Topman, Miss Selfridge, and Burton, filed for bankruptcy last November. Administrators released an update in July, stating that Arcadia was facing $2.4 billion in claims. This includes a $700,000,000 deficit in the pension plan for Arcadia’s former workers.

Teneo, Arcadia’s administrators, has sold off more assets than $820m to cover the debt. This includes the sale of Topshop, Top Man, and Miss Selfridge to ASOS in February. The deal of Dorothy Perkins and Burton brands to Boohoo in February. Evans was also sold to City Chic in December 2020.

Teneo, however, made the most explicit statement yet in the July progress report. He stated that the proceeds from Arcadia’s sale would be significantly less than the amount Sir Philip owes. Teneo covered the Apollo loan secured debt and a separate $255m in secured pension debt. Teneo also stated in July that “Funds will now be released to enable a distribution of c.10p to unsecured creditors, based upon total expected claims of approximately c.PS1.8billion,” and that “[t]he remaining unpaid element of the Pension Trust Debt will not be paid in full. Dividends will match those paid to other unsecured creditors.” This means that Arcadia can only 10% of its unsecured debt to its unsecured.

Teneo refused to comment or give guidance on the size of the potential pension deficit or provide specifics about how the money raised on Friday will be allocated. But any significant shortfall will likely anger the U.K. politicians who voted in 2016 to remove Green from his knighthood after he had sold BHS for PS1 and BHS in 2015. (Green is still a knight. The department store collapsed in the next year, leaving the chain with a large pension deficit. After much public outcry Green was forced into paying $461 million from his pocket to clear the debt.

Forbes deems Philip & Cristina Green worth $2.4 Billion, based mainly on a $1.7 billion dividend from Arcadia, which they paid in 2005.

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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