The parent of collapsed UK retailer Mothercare has secured a revised payment schedule with its pension scheme trustees and said it is “on track” with its planned recapitalisation.
This comes nearly three months after Mothercare placed its UK business into administration after 58 years of trading.
The Pension Protection Fund told Professional Pensions that members of the Mothercare pension scheme had been reassured of their protection in the immediate aftermath of the collapse.
An announcement on the London Stock Exchange this morning (23 January) said Mothercare has completed both the placing of £3.2m new equity and the issuance of an additional £5.5m tranche of convertible unsecured loan notes. It has therefore been able to secure a revised payment schedule with pension scheme trustees, reducing contributions over the next 15 months.
Mothercare said it set out a range of funding options in November totalling £50m, which were available to the wider group. These options included an equity issuance of up to £25m and indicative terms for a £15m term loan from lending and investment firm Gordon Brothers.
The announcement said the administration of Mothercare UK "results in a substantial reduction in the amounts owed" by the parent company but this "has been behind expectations with a shortfall arising from the Mothercare UK stock clearance". The group estimated it may have to "make good a shortfall of some £10m".
The retailer has since announced a partnership with Boots that will see it become the exclusive franchisee of the Mothercare brand in the UK from July.
Mothercare chief executive (CEO) Mark Newton-Jones also announced he would step down, effective today, but remain as a non-executive director. Current chief financial officer Glyn Hughes will become interim CEO.
Nearly every trustee is confident of the next stage in their scheme’s strategy, despite almost an equal number being forced to consider replacing plans within the prior 12 months, according to research by Barnett Waddingham.
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Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment said last week.
Regulators must act now to impose some "proper regulation" to stop another defined benefit (DB) transfer advice disaster, saysTim Sargisson.
Opportunities for defined benefit (DB) schemes to pursue investment approaches that help repair the UK’s economy cannot stand in the way of improving member outcomes, Aegon says.