Owner of Topshop facing collapse ‘despite loan offer’

Owner of Topshop facing collapse ‘despite loan offer’
General view of a Topshop store logo, owed by Arcadia group on Oxford street in London, Britain, November 30, 2020. (Reuters)
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Updated 01 December 2020

Owner of Topshop facing collapse ‘despite loan offer’

Owner of Topshop facing collapse ‘despite loan offer’
  • British sportswear tycoon Mike Ashley’s Frasers Group meanwhile confirmed Monday that it has offered a £50 million loan to help Arcadia avoid bankruptcy

LONDON: British clothing retailer Arcadia, ravaged by coronavirus lockdowns and fierce online competition, remains on the brink of bankruptcy despite an emergency loan offer.

The owner of high-street chains including Topshop, Topman, Dorothy Perkins, Burton, Miss Selfridge, Evans and Wallis, is set to enter administration “within hours,” the BBC reported citing senior company sources, in a move that would threaten some 13,000 jobs.

The failure would deliver another body blow to Arcadia boss Philip Green, whose reputation had already taken a battering from the high-profile collapse of retailer BHS four years ago.

British sportswear tycoon Mike Ashley’s Frasers Group meanwhile confirmed Monday that it has offered a £50 million ($67 million) loan to help Arcadia avoid bankruptcy.

Sources however said that they do not anticipate a rescue deal from Ashley, who also owns Newcastle United football club and bought troubled department store chain House of Fraser in 2018.

“Frasers Group notes recent press reports concerning the potential provision of emergency funding by the company to the Arcadia Group,” Frasers said in a statement.

“The company can confirm that it has made an offer and provided draft terms to the Arcadia Group for a loan of up to £50 million and is now awaiting a substantive response.

“Should the company and the Arcadia Group’s efforts to agree an emergency funding package fail and the Arcadia Group enter into administration, the company would be interested in participating in any sale process.”

Arcadia had stated on Friday that the deadly Covid-19 pandemic has had a “material impact” on trading due to enforced closures during lockdowns, adding it was working on “a number of contingency options” to secure the future of its brands.

Back in 2015, Green sold retailer BHS for just £1 to Dominic Chappell, a former bankrupt businessman with no retail experience. BHS then collapsed one year later, resulting in 11,000 job losses and leaving a massive deficit in its pension fund.


Jack Ma video reappearance fails to soothe all investor concerns

Jack Ma video reappearance fails to soothe all investor concerns
Updated 29 min 42 sec ago

Jack Ma video reappearance fails to soothe all investor concerns

Jack Ma video reappearance fails to soothe all investor concerns
  • Ma had not appeared in public since Oct. 24, after he blasted China’s regulatory system
  • Chinese regulators have set about reining in Ma’s financial and e-commerce empires

HONG KONG: Billionaire Jack Ma’s 50-second video reappearance has done little to resolve Alibaba Group’s troubled relationship with regulators that is making some investors hesitate about owning the Chinese e-commerce giant’s stock.

Relief at Ma’s first public appearance added $58 billion in market value on Wednesday as Alibaba’s Hong Kong-listed stock soared, though doubts crept in a day later and the stock fell more than 3 percent as the broader market steadied near two-year highs.

Ma had not appeared in public since Oct. 24, when he blasted China’s regulatory system. That set him on a collision course with officials and led to the suspension of Alibaba fintech affiliate Ant Group’s blockbuster $37 billion IPO.

A source familiar with the matter said Ma cleared his schedule late last year to keep a low profile, prompting discussion at Alibaba about when and how he should reappear to assure investors.

It was decided he should do something that would appear as part of his normal routine, rather than anything overt that could irk the government.

While Ma has stepped down from corporate positions, he retains significant influence over Alibaba and Ant, and the regulatory crackdown on his business empire coupled with his absence was a concern for some investors.

There was skepticism that Ma’s brief reappearance meant all was well with his businesses.

“The coast is not all clear for Alibaba and it is a judgment call whether you believe the company can still thrive in the changing environment,” said Dave Wang, a portfolio manager at Singapore’s Nuvest Captial, which owns Alibaba stock.

“Without some skepticism, the price would be a lot higher,” he said, adding his firm had increased exposure to China and with it Alibaba, which he believes can prosper over the medium to longer term.

Two of the company’s investors in the US who have sold out or reduced positions in Alibaba said they needed more reassurance about the company and the regulatory environment before reconsidering the stock.

“One of our top criteria is leadership and we were investing in Alibaba because I really respect Jack Ma as a leader,” said William Huston, founder and director of institutional services at independent investment advisory firm Bay Street Capital Holdings in Palo Alto, CA, with assets under management of $86 million.

“We all know that just because he showed up ... doesn’t necessarily explain what is going on.”

Huston, whose firm cut its holding in the Chinese firm last year from 8 percent of its portfolio to less than 1 percent, said the halting of the Ant IPO in November had caused uncertainty, and that Alibaba was “not a prudent investment” for it going forward.

David Kotok, chairman and chief investment officer at Cumberland Advisers, Florida, which has about $4 billion in assets, said he held Alibaba last year but also sold as the Ant IPO was pulled.

“When you don’t know what to do in an evolving situation like this you can’t use traditional securities analytics to reach decisions. We are standing aside and watching,” Kotok said.

Chinese regulators have set about reining in Ma’s financial and e-commerce empires since the Ant IPO suspension, which has weighed on its stock that remains below levels prior to the cancelation of the Ant IPO.

“What his actual state is will be completely up to Beijing to reveal to us,” Leland Miller, CEO of US-based consultancy China Beige Book.

“What we do know is whether Jack is running around, Jack is hiding or something else, Alibaba is not in the clear. There is a lot more of the story still to see.”

Some investors are, however, betting on long-term potential for Alibaba in the world’s second-largest economy.

Dennis Dick, a proprietary trader at Bright Trading, who holds Alibaba shares, said he had protected against a potential fall when speculation about Ma’s whereabouts began by buying put options.

He covered those puts earlier in January on a report that Ma was OK and retains a long position in the stock.

“We have been investors for many years ... there’s a very strong team of executives and Alibaba is bigger than just one person,” said a Hong Kong based long-only investor, declining to be named as he was not authorized to speak to the media.