According to a report by The Times, HSBC agreed to stand behind Arcadia’s debts to suppliers, which have asked for advance payments since credit insurers withdrew some support this year.
HSBC will now take security over Arcadia’s cash deposits, according to Companies House records, and The Times said that in return it is understood that the bank will underwrite letters of credit to Arcadia’s suppliers if required.
It comes after the retail group announced it was also seeking to halve the annual contributions to the Arcadia Group’s pension scheme as part of its restructuring plan.
According to Sky News, Green wishes to cut the annual pension fund from £50m to £25m and made the proposal during discussions between Arcadia’s advisers, its pension trustees and The Pensions Regulator.
Sky News also reported Arcadia is considering a switch from RPI to the lower CPI inflation measure of calculating annual payment uplifts in order to lower the company’s pension deficit calculation. It is understood to currently have a deficit of about £550m on a conventional funding basis, and £750m on a full buyout basis. However this move would also see its 18,000 employees benefits reduced.
The news also follows reports in March which indicated Green was considering proposing a CVA which would be launched in late April or early May, closing up to 67 stores. It also comes just over two years after he was forced to contribute £363m in pension payments to thousands of former BHS workers.