Toys R Us close to agreeing pension rescue deal | City & Business | Finance

Toys R Us close to agreeing pension rescue deal | City & Business | Finance


Toys R Us is close to agreeing a rescue deal with the Pension Protection Fund ahead of a key creditors meeting today.

The PPF wants the struggling company to inject £9m into its pension scheme

A meeting to vote on the planned restructuring plan for Toys R Us will take place at around 12.00pm today in London. Results are expected on the future of 3,200 jobs across its 105 stores as it struggles to win support for a planned restructure.

The matter being voted on is Toys R Us’s pension deficit.

The Pension Protection Fund wants the company’s US owner to inject capital into the fund to protect the firm’s pension obligations. However, the US business has itself filed for Chapter 11 bankruptcy protection meaning that UK pension holders could lose out.

It is being reported that Britain’s biggest toys retailer and the Pension Protection Fund (PPF) worked through the night to make “significant” progress ahead of a crucial creditor vote due to take place on Thursday at 12.00pm.

The broad terms of a deal to secure the PPF’s support is said to have been agreed, comprising a ten-year commitment to wiping out Toys R Us UK’s pension deficit, some additional funds and a number of other commitments from the company which give the PPF security over company assets.

According to Sky News, the package is expected to include a sum greater than the £9m originally sought by the PPF, but less than half of it would be in the form of an up-front cash contribution and the remainder would be in the form of security or guarantees over other Toys R Us UK assets over an unknown period as well as other elements, according to sources.

Although the deal is all but agreed, it remains possible that the ongoing talks could still collapse ahead of the creditors’ vote.

If the vote goes through, a minimum of 500 UK jobs will also be lost, meaning that 2,700 jobs have been saved. 

The rescue plan, which needs the support of 75% of creditors, would involve closing a quarter of Toys R Us’s UK stores, and steep reductions in the rent bills at many others.

However in good news to parents, Toys R Us shops will remain trading throughout the Christmas period and well into the new year, but will begin closing from next spring.



Source: Express.co.uk

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