Monsoon landlords demand equity stake as CVA looms | Business News

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A quartet of commercial property giants are demanding an equity stake in Monsoon Accessorize, the fashion retailer, in return for supporting a financial restructuring.

Sky News has learnt that British‎ Land, Hammerson, M&G Investments and Roubaix Group have joined forces to negotiate improved terms from a proposed deal with Peter Simon, Monsoon’s owner.


The four landlords, which are understood to own a significant number of Monsoon Accessorize’s stores, wrote to Mr Simon this week to request that they be given a shareholding in his business if they agree to substantial rent cuts.

Mr Simon is on the brink of launching an insolvency mechanism called a Company Voluntary Arrangement (CVA) to force through big rent reductions, but a letter sent by the quartet of store-owners instead proposes a negotiated deal that would avoid a CVA.

The demand resembles a similar tussle taking place between Sir Philip Green, the Top Shop tycoon, and big property-owners who have been promised a 20% stake in Arcadia Group if they support a CVA next week.

Sources close to Monsoon’s landlords said any equity stake in the company would be distributed among all landlords, not only the four which are negotiating collectively.

The tactic underlines the influence landlords have as retailers become increasingly desperate to reduce their cost-bases, and the frustration in the commercial property industry at the deluge of CVAs unveiled in the last two years.

Last weekend, The Sunday Times reported that Mr Simon would ‎inject up to £34m of his own money into the business to keep it afloat.

Privately held, Monsoon Accessorize trades from about 270 stores across the country, with rent cuts being sought at approximately two-thirds of them, the newspaper added.

Its largest shops, which comprise both the Monsoon and Accessorize fascias, are understood to be faring particularly poorly in a brutal environment for retailers.

Property industry insiders said Mr Simon was likely to formally launch the restructuring next week to allow the company to implement its restructuring ahead of June’s rent quarter day.

The news is the latest blow to a high street reeling from the accelerating shift to online shopping and pressures on business costs and consumer spending.

Earlier this week, Sky News revealed that Boots, which is owned by the US-based healthcare giant Walgreens Boots Alliance, has put more than 200 of its UK stores under review for potential closure.

None of the landlords which are negotiating collectively with Monsoon Accessorize would comment on Thursday.

However, one source pointed out that they had confidence in Mr Simon’s strategy after a restructuring is completed.

“The landlords believe the business has a future, otherwise they would not be interested in taking equity,” the source said.

Under chief executive Paul Allen, Monsoon Accessorize’s holding company, Drillgreat, has been closing stores when leases expired in recent years.

However, the intensification of the retail sector’s problems has now led it to the brink of a CVA, which is typically only viable when the alternative for a company is bankruptcy.

Drillgreat’s most recent publicly disclosed results cover the year to August 26, 2017, which showed an operating loss of just over £10m.

A Monsoon Accessorize spokesman declined to comment beyond a recent statement confirming that “the UK retail trading environment is tough and we are continuing to look at options to reduce our overall costs as we restructure the business in the UK and internationally”.


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