More than 2,000 jobs secured after Toys R Us strikes pension deal

The beleaguered retailer's proposal for a company voluntary arrangement (CVA) was voted through on Thursday after it obtained the backing of the Pension Protection Fund (PPF).

However, while the CVA will allow Toys R Us to stay afloat, at least 26 loss-making UK stores will shut as part of the restructure, meaning up to 800 jobs are set to be lost.

Without the PPF's backing, the collapse of the CVA restructuring plan would have pitched Toys R Us into administration, with the potential loss of 3,200 jobs just days before Christmas

Now, although the branch at the Meole Brace shopping centre in Shrewsbury is slated for closure next year, the deal saves the stores at Birchley Island in Oldbury, at Merry Hill and in Stafford.

Malcolm Weir, the PPF's director of restructuring and insolvency, said: "We have been working closely with Toys R Us and their advisers in the run-up to the CVA vote. We can confirm that an agreement has now been reached and we will now be voting in favour of the proposals at the CVA meeting today."

The fate of all 3,200 Toys R Us jobs was hanging in the balance ahead of the ballot, with administrators waiting in the wings had the CVA been rejected.

The Pension Protection Fund (PPF) had earlier refused to back the retailer's rescue plans, but concessions from the company, including an offer to reduce its deficit recovery plan to 10 years from 15 years, meant the deal received the PPF's blessing.

In total, Toys R Us has agreed to pay £9.8 million into the pension plan, made up of £3.8 million in 2018, with a further £6 million promised over 2019 and 2020.

"This offer goes a long way to addressing the PPF's concerns and in de-risking the pension scheme, offering greater protection for the current and retired members in the pension scheme.

"The PPF will always seek assurances on behalf of the pension schemes and pension scheme members it protects, as well as consider the interests of other UK companies that pay the Pension Protection Fund levy."

Other creditors include the firm's landlords, who will stomach rent cuts as part of the restructuring. Toys R Us said 98 per cent of its creditors voted in the favour of the CVA.

Steve Knights, managing director of Toys R Us UK, said: “We are pleased to have secured the support of our creditors and will be working closely with them in the months ahead. 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.”

Consultations with staff at the stores set for closure will start in the New Year.

The retailer, which is owned by US-based Toys R Us Inc, trades from 84 stores in the UK and has 21 concessions.

Toys R Us has said that trading has suffered as its warehouse-style stores, opened in the 1980s and 1990s, have proved "too big and expensive to run", while it has also struggled to keep up with online competitors.

The announcement comes just months after the US-based retailer filed for bankruptcy protection in the US and Canada.