BARRISTER RICHARD Nesbitt will be asked to remain on as chairman of Arnotts if the European Commission allows State-owned Anglo Irish Bank and Ulster Bank take control of the Dublin retailer.
The banks are understood to be keen to maintain the retailer’s connection with the Nesbitt family – the founders of the business in 1843 – should the new controlling structure be approved by Brussels. The commission is due to report back on the plan on August 9th.
While Mr Nesbitt, whose family are 55 per cent shareholders, is expected to remain on as chairman, his position will be as figurehead as the existing shareholders will lose their equity if the banks take control. The banks, owed about €300 million by Arnotts, plan to swap their debts for control of the business. While they may bring in new management to put the retailer on a sound footing, the Nesbitt family’s tie to staff is a factor in the decision to seek to retain him as chairman.
The management of the business has shifted “increasingly” to US private equity firm, Palladin Capital, which specialises in restructuring struggling retailers, according to informed sources.
Palladin was hired as part of the Arnotts restructuring agreement with Anglo, which is owed about €165 million, and Ulster Bank, which is owed about €135 million.
The company has been working with Arnotts management since March on a long-term retail strategy for the Dublin business.
Nigel Blow, former chief executive of Brown Thomas, was brought in as a consultant to help run the business earlier this year.
The chief executive in charge of the retail business, David Riddiford, and Brian Kearney, the chief executive of Arnotts Holdings, which is behind both the retail and property investment divisions, remain involved in the business.
Boston-based Palladin, led by former investment banker Mark Schwartz, has taken majority and minority stakes in retailers it has restructured. Mr Schwartz has been director or senior manager of US retail businesses including Gordon Brothers, an investor in high-street brands; Nine West Group; and Jones Apparel Group.
Arnotts ran into financial difficulties due to ambitious plans to redevelop the area surrounding the landmark Henry Street store into the so-called “Northern Quarter”, a €750 million project.
