Toys R Us has struck a last minute deal with the Pension Protection Fund (PPF) to put more than £9m into its pension scheme, meaning thousands of jobs have been saved at the UK arm of the retailer, which is now able to proceed with its company voluntary agreement (CVA) plan
The negotiations will see Toys R Us, whose US parent has filed for Chapter11 bankruptcy, pay £9.8m into its pension fund over two years. The PPF said the new offer was made up of a payment of £3.8m in 2018, with a further £6m promised over 2019 and 2020.
Up until now the retailer’s future had hung in the balance because of the size of its pension deficit, which tops £25m. Previously it had committed to paying only £1.6m a year into the pension for the next three years.
However, now that 98% the creditors have agreed the CVA, the risk of the company falling into administration has passed. However, Toys R Us, which employs some 3,200 staff in the UK, is to close 26 of its 105 UK outlets during 2018, putting 800 jobs at risk.
Steve Knights, managing director of Toys R Us UK, said: ‘We are pleased to have secured the support of our creditors and will be working closely with them in the months ahead. The vote in favour of the CVA represents strong support for our business plan and provides us with the platform we need to transform our business so that we can better serve our customers today and long into the future.
‘All of our stores across the UK will remain open for business as normal until spring 2018. Customers can continue to shop online and there will be no changes to our returns policies or gift cards across this period.’
Malcolm Weir, the PPF’s director of restructuring and insolvency, said: ‘This offer goes a long way to addressing the PPF’s concerns and in de-risking the pension scheme, offering greater protection for the current and retired members in the pension scheme.’
