Toys R Us has agreed a deal with the Pension Protection Fund (PPF) to inject £9.8m into its pension scheme.
The move is a big step to rescuing the retailer, where 3,200 UK jobs hang in the balance.
The PPF said the payment was composed of £3.8m in 2018, with a further £6m promised over 2019 and 2020.
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.
The retailer’s creditors have been meeting on Thursday to negotiate a 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.
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.
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.
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.
Toys R Us factfile
- The toy retailer started in the US in the 1950s
- It reached the UK in 1985, as a subsidiary of the US chain, when it opened five stores
- It launched its UK website in 1996
- The retailer now has 105 stores around the UK
- Its flagship stores are at London’s Brent Cross shopping centre and in Bristol
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.”
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.