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Toys R Us agrees deal to give £9.8m to pension fund Toys R Us agrees rescue plan with creditors
(35 minutes later)
Toys R Us has agreed a deal with the Pension Protection Fund (PPF) to inject £9.8m into its pension scheme. Toys R Us has staved off collapse after creditors backed a rescue plan for the UK retailer.
The move is a big step to rescuing the retailer, where 3,200 UK jobs hang in the balance. It follows last-minute negotiations with the Pension Protection Fund (PPF) to secure a £9.8m injection into the company's pension fund.
The PPF said the payment was composed of £3.8m in 2018, with a further £6m promised over 2019 and 2020. However, the rescue plan entails closing 26 of its 105 UK outlets, putting 800 jobs at risk. The company employs 3,200 staff in total.
Toys R Us's UK staff pension scheme has a deficit of more than £25m, and the PPF rejected the company's earlier offer to inject £9m. Toys R Us's UK staff pension scheme has a deficit of more than £25m.
The retailer's creditors have been meeting on Thursday to negotiate a rescue plan, which hinged on a resolution of the pension deficit. The retailer's creditors met on Thursday to vote on the rescue plan, which hinged on a resolution of the pension deficit.
Creditors' talks were twice suspended, and were due to re-start in the afternoon. The PPF said the new offer from the company was composed of £3.8m in 2018, with a further £6m promised over 2019 and 2020.
Toys R Us, which has 100 stores and outlets in the UK, put forward a company voluntary arrangement (CVA), which is a step short of going into administration. The vote saw 98% of Toys R Us creditors backing the arrangement.
Under its CVA plans, Toys R Us has proposed to close at least 26 loss-making UK stores, a move that would put up to 800 jobs at risk and mean rent cuts for landlords. Toys R Us will continue to trade under its company voluntary arrangement (CVA), which is a step short of going into administration.
The company sells largely from warehouse-style stores at the edge of towns, but says these are now "too big and expensive to run". It is also finding it hard to compete against online toy retailers. Steve Knights, managing director of Toys R Us UK, said: "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."
Toys R Us factfileToys R Us factfile
Earlier this week, Toys R Us had reassured shoppers seeking last-minute presents by saying: "There will be no disruption for customers shopping through the Christmas and New Year period." The company sells largely from warehouse-style stores at the edge of towns, but says these are now "too big and expensive to run". It is also finding it hard to compete against online toy retailers.
Toy's R Us's parent company in the US is in formal bankruptcy protection proceedings. Recent reports suggest it is considering closing between 100 and 200 stores in America.Toy's R Us's parent company in the US is in formal bankruptcy protection proceedings. Recent reports suggest it is considering closing between 100 and 200 stores in America.