The Pension Protection Fund has indicated its intention to vote in favour of Mothercare’s Company Voluntary Arrangement, it has been announced.

In its Refinancing and Restructuring report published today, Mothercare confirmed that it had received the support of the pensions lifeboat for its CVA proposal.

The CVA, which is set to see the reduction of the childcare retailer’s store count to 78 stores by full year 2020, will also trigger a PPF assessment period. This will involve the PPF assuming the rights of the pension schemes’ trustees, including voting rights, the report has indicated.

In addition, Mothercare has confirmed that it has entered into a deficit recovery contributions deed to ensure that pension scheme contributions are safeguarded.

Mothercare chair Clive Whiley commented: “Accordingly, the claims of all suppliers, the entitlements of employees and recovery contributions to the group's defined benefit pension schemes will continue to be paid in full.”

The Mothercare DB pension schemes were closed from 30 March 2013. In its most recent results, in the 28 weeks to 7 October 2017, the value of its DB obligations was £408.6m, with a net liability of £68.9m.

PPF head of restructuring and insolvency team Malcolm Weir said: “We welcome that the company has been prepared to listen and take on board our view that the CVA proposals should not be to the detriment of the pension schemes. Having received additional suitable assurances about the position of the pension schemes, we are able to support the CVA proposals as announced today. Our expectation is that the company will continue to take full responsibility for the pension schemes going forward.

“The PPF will always act robustly in any CVA in the interests of all pension scheme members and our levy-payers”.

Further commenting on the retailer’s plans, Whiley concluded: “I am satisfied that the actions detailed in this announcement depict a business that is undergoing significant change both financially and culturally, however, we should not forget the impact of the CVA Proposals on our colleagues‎ and contractors.

“The launch of the CVA Proposals does not affect the current ordinary course operations of the group. Mothercare is not in and will not be in administration as a result of launching the CVA Proposals.”

The retailer’s refinancing will also involve a proposed equity capital raising of £28m, revised committed debt facilities of £67.5m with a final maturity extended to December 2020, new £8m shareholder loans from the company’s largest shareholders and a new debtor backed facility of up to £10m from one of the company's trade partners.

Mothercare is due to publish its first quarter trading results in July 2018.

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