Defined Benefit  

Pensions lifeboat eyes Carpetright recovery plan

Pensions lifeboat eyes Carpetright recovery plan

The Pension Protection Fund (PPF) is in “constructive discussions” with Carpetright, which yesterday (12 April) presented a company restructuring proposal.

The pensions lifeboat can vote against the retailer announced company voluntary arrangement (CVA), since Carpetright’s defined benefit (DB) pension fund is one of the creditors.

Under the CVA, the retailer is proposing closing 92 stores and cutting 300 jobs. The restructuring proposal will also allow Carpetright to ask for rent concessions on another 113 sites.

Carpetright is also expecting to raise £60m in capital, which will be used to fund the retailer’s ongoing strategy, reduce indebtedness and cover the costs associated with the CVA.

The group sales are down 2.3 per cent, and the company has issued two profit warnings since the beginning of the year.

It’s pension fund, however, is in better shape than the plans of other retailers that recently went bust, such as BHS or Toys R Us.

According to Carperight’s interim results, announced in December, the pension fund had a deficit of £200,000 as of 28 October 2017.

The retailer reduced its pension deficit by £3m, due to actuarial gains of £2.6m and a contribution of £400,000.

FTAdviser understands that the lower deficit means that the pension fund position as a creditor in the CVA will be of significant less importance.

A spokesperson at the PPF said: “We are in constructive discussions with the company and their advisers about the CVA proposals and their implications for pension schemes associated with the company.

“Members can be reassured that the PPF is there to protect them.”

The pensions lifeboat was also involved in Toys R Us restructuring plan discussion, which ended up not being successful, as the company filed for insolvency in February.

The retailers DB scheme is now in PPF assessment. However, PPF was able to secure a first payment into the plan, as agreed in the CVA.

maria.espadinha@ft.com