Defined Benefit  

Pensions lifeboat in talks with Mothercare

Pensions lifeboat in talks with Mothercare

Mothercare is the fourth retailer to fall on the Pension Protection Fund (PPF) radar, as the company, which has two defined benefit (DB) schemes, is working on a restructuring plan.

FTAdviser understands the pensions lifeboat is taking advice from PricewaterhouseCoopers (PwC), as Mothercare is "finalising a comprehensive restructuring and refinancing package to put the business on a stable and sustainable financial footing," the company stated.

If the retailer instigates a company voluntary arrangement (CVA), through which it would seek creditor approval to restructuring plan, the PPF will have a say in it, since it will represent the pension schemes.

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A PPF spokesperson said: "We can't comment on the circumstances of ongoing companies.

"The PPF provides a valuable safety net for pension scheme members if an employer does go bust."

According to Mothercare's latest annual report, the defined benefit pension plans - the Mothercare Staff Pension Scheme and the Mothercare Executive Pension Scheme - which were closed to future accrual in 2013, had a deficit of £80m at 25 March 2017.

The retailer has a deficit recovery plan in place for both schemes, with annual contributions of more than £8m until 2022.

According to a market statement, Mothercare is in the final stages of detailing its restructuring plans, "alongside new committed debt facilities, an underwritten equity issue and access to other sources of capital", which it intends to announce with its preliminary results, to be published on Thursday (17 May).

Mothercare, which has been struggling for years, follows in the footsteps of House of Fraser, Carpetright and Toys R Us – all of which had discussions with the PPF.

Despite achieving a voluntary agreement with the latter for scheme repayments, the company went bust, and the Toys R Us Pension & Life Assurance Scheme has entered PPF assessment.

Discussions about the two other schemes are still ongoing.