Wednesday, 17 January, 2018

Toys R Us proposes ten-year pension deal to stave off collapse

Toys R US To Close 87 Stores Source Getty
Jerome Frank | 21 December, 2017, 01:10

Without Toys R Us agreeing to that demand, the PPF - dubbed the United Kingdom pensions "lifeboat" - would likely vote down the proposal.

Under the CVA plans, Toys R Us is proposing to close at least 26 loss-making United Kingdom stores, with the loss of 800 jobs.

The retailer, which has 84 stores and employs 3,200 staff in the United Kingdom, has been loss-making for seven of the past eight years and in its latest accounts had an operating loss of £500,000 on sales of...

The company had a cumulative pensions deficit of £18.4m in January and the pensions lifeboat could be put at risk if it didn't come up with the £9m that the PPF was requesting.

The questions add to pressure on Toys "R" Us U.K. management as they struggle to reach a deal with a pension bailout fund ahead of a key creditor vote on Thursday.

Malcolm Weir, director of restructuring and insolvency at the PPF said: "We continue to work closely with the trustees of the Toys R Us pension scheme and externally appointed advisors given the current CVA proposals".

Sources close to the process claim that Toys R Us' hands are tied as it doesn't have £9mln spare to inject.

However, the organisation has said discussions are still ongoing with Toys R Us and its advisers, and it is prepared to change its vote if suitable assurances are made on the future of the company's pension scheme.

Questions were also raised about why the chain's United Kingdom arm wrote off £584.5m in loans owed by a Toys R Us firm based in the British Virgin Islands and how it might impact the pension scheme.

Concerns have also been raised about the write-off of £584.5m in loans owed by a Toys R Us firm based in the British Virgin Islands as part of a group reorganisation a year ago and what impact this might have on the pension scheme.

Despite a recent streamlining of its United Kingdom operations, the warehouses of Toys R Us could grind to a complete halt this week due to a tiresome battle over pension provisions that could see the administrators called in by Thursday.

All Toys R Us shops will remain trading through Christmas, but if the CVA is approved, those stores affected will begin closing from the spring.

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