In an eleventh-hour attempt to stave off a collapse threatening 3,200 jobs, Toys R Us has proposed a deal that could wipe out its pension deficit within a decade.
According to a report, the company made the proposal at a meeting with the Pension Protection Fund lastTuesday.
The offer that includes an injection of a sum greater than a planned payment of £1.6m into its pension scheme in January and March would reduce toys R Us’ deficit recovery plan from 15 years to ten years and.
The offer however falls short of the PPF’s demand for a £9m up-front contribution to the scheme, an equivalent of three years of company payments and associated levies which according to sources and at time of reporting, Toys R Us has not found to pay.
The retailer needs the support of the PPF at a vote of creditors on Thursday for a restructuring that would involve the closure of a quarter of its stores and lower rent bills at many others.
The pensions lifeboat has said that it intends to vote against the plan because it does not offer adequate support for the toy retailer’s retirement scheme.
Without the PPF’s backing the Company Voluntary Arrangement will fail, with Alvarez & Marshal on stand-by to handle a pre-Christmas administration.
One source indicated that the additional contributions offered by Toys R Us over the next three months would be marginally superior to the likely returns to the PPF if it were to fall into administration.
Meanwhile, after filing for bankruptcy in September last, the toy major has reported that its net sales for the third quarter were $2.02 billion, a fall of $89 million compared to that of the previous year.
According to the toy retailer, the decline was largely attributable to a decline in same-store sales and, most notably, in the baby category. However, an increase in consolidated e-commerce sales partially offset the decrease.
