Toys R Us is proposing to eliminate its pension deficit over the next decade in a bid to stave off collapse, according to Sky News.
According to Sky News, the retailer made the proposal at a meeting with the Pension Protection Fund (PPF) on Tuesday.
The offer, which would reduce Toys R Us’s deficit recovery plan from 15 years to ten years, also includes an injection of a sum greater than a planned payment of £1.6m into its pension scheme in January and March.
It falls short of the PPF’s demand for a £9m up-front contribution to the scheme – which would be equivalent to three years of company payments and associated levies.
Toys R Us needs the PPF’s support 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 (CVA) will fail, with Alvarez & Marsal 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 Toys R Us were to fall into administration.
Talks between Toys R Us and the PPF were continuing on Wednesday morning in an effort to hammer out a deal to secure the pension body’s backing.
The creditor vote takes place on Thursday morning in London.