MPs are scrutinising the Pensions Regulator’s possible involvement in Debenhams’ refinancing discussions after the retailer issued a second profit warning earlier this week.
Work and pensions committee chair Frank Field wrote to the regulator’s chief executive, Lesley Titcomb, to probe its involvement with the struggling department store chain’s pension schemes.
The committee is also assessing the regulator’s engagement with trustees, and Field has asked about the regulator’s involvement in “ongoing discussions surrounding the refinancing of the business”.
Debenhams is mulling various refinancing options that could see it do a debt-for-equity swap with lenders, a rights issue to raise much-needed cash, or a company voluntary arrangement that could close around 50 stores.
In the letter, sent on 26 February, Field asks the regulator to explain “what involvement, if any, TPR has in ongoing discussions surrounding the refinancing of the business and other options to secure its future, including the future of its pension schemes”.
The regulator was reportedly in talks with Debenhams last September about entering a restructuring plan with trustees of the two defined benefit pensions schemes.
Debenham’s October full-year results revealed that its pension schemes held a net surplus of £159.4m, though while its executive pension plan was fully funded as of October 2017, its non-executive retirement scheme was in deficit.
Debenhams had committed to pay £5m a year into the non-executive scheme until March 2022 to return it to a fully funded state.
Earlier this week Sports Direct owner Mike Ashley, who holds almost a 30 per cent stake in Debenhams, made an audacious bid to install himself as an executive director at the struggling retailer.
If successful, he will wipe out the current board aside from new recruit, CFO Rachel Osborne.
Read more: Debenhams issues another profit warning
Debenhams also warned it will not hit profit guidance it only issued in January, as market uncertainty and increased refinancing costs weighed it down.