Toys R Us tables last-ditch pension deal to halt collapse, reports
The firm has tabled a fresh proposal to eliminate the pension shortfall, according to reports.
Toys R Us UK has made concessions over its pension deficit in an attempt to push through a deal that would save the embattled retailer from collapse, according to reports.
The firm has tabled a fresh proposal to eliminate the pension shortfall during a meeting with the Pension Protection Fund (PPF) on Tuesday, Sky News has reported.
The deal cited by the news organisation would shift its deficit recovery plan to 10 years from 15 years and offer a larger payment than the £1.6 million planned for its pension scheme in January and March.
Around 3,200 jobs at Toys R Us currently hang in the balance because the PPF refuses to back the retailer’s rescue plans unless it agrees to pay £9 million upfront into its pension fund.
The PPF is demanding that Toys R Us makes the payment to secure three years’ worth of funding upfront for its defined salary staff pension scheme, which has a shortfall of between £25 million and £30 million.
But it is believed Toys R Us does not have enough cash to meet the PPF demands.
The PPF’s proxy vote intentions mean the planned company voluntary agreement (CVA) may not go ahead, as Toys R Us needs the backing of 75% of creditors, including landlords.
Toys R Us has until Thursday’s CVA final vote in the hope of reaching an agreement on the funding.
Under its CVA plans, Toys R Us is proposing to close at least 26 loss-making UK stores, putting up to 800 jobs at risk out of its 3,200-strong workforce – while landlords will also take significant rent cuts.
The retailer, which is owned by US-based Toys R Us Inc, trades from 84 stores in the UK and has 21 concessions.
The PPF’s tough stance comes after the Pensions Regulator faced heavy criticism for failing to act to better protect pensioners during the failure of BHS.
Toys R Us said on announcing its CVA plans that trading has suffered as its warehouse-style stores opened in the 1980s and 1990s have proved “too big and expensive to run”, while it is also understood to have struggled to keep up with online competitors.
The announcement comes just months after the US-based retailer filed for bankruptcy protection in the US and Canada as it battled mammoth debts and increasing competition online.