Members of the Debenhams pension schemes have been told the funds will receive "enhanced contributions" and continue to be operated by the company after it negotiated a £200m refinancing deal.
Debenhams, which is listed on the London Stock Exchange, on Friday (March 29) confirmed it had agreed a new deal with existing lenders.
Terry Duddy, chairman of Debenhams, said: "We are pleased to have agreed this comprehensive funding package which secures the future of the Debenhams business and provides reassurance for Debenhams' employees, pension holders, suppliers, lenders and other stakeholders."
The agreement includes £101m, which was taken by the company on Friday, and a further £99m subject to one of several milestones being reached by April 8. The deal also replaced the £40m of interim borrowing announced on February 12.
In an announcement to the stock exchange, Debenhams stated: "Following discussions between the company, the trustees of the Debenhams pension schemes and key pensions stakeholders, agreement has been reached with the trustees to provide enhanced support to the pensions schemes, including increased contributions and enhanced security."
In September, FTAdviser reported that The Pensions Regulator was in discussions with the Debenhams pension scheme trustees about the potential impact of the retailer entering a restructuring plan.
A spokesman for the Debenhams Pension Schemes welcomed the agreement, which, he said should reassure members that they would continue to operate as normal.
He said: "We hope that the agreement will form the basis of a sustainable solution for the trading business that ensures that it will continue to support the pension schemes on a long-term basis.
"The trustees have worked with our specialist advisers throughout the discussions, to ensure that members’ interests are taken into account, and we have consulted closely with The Pensions Regulator and the PPF at every stage."
However, the milestones the company must pass to secure the second part of the funding package are significant.
Mike Ashley’s Sports Direct (or any other holder of 25 per cent or more of the company shares) must either make a firm and binding offer for the company or drop its attempt to oust all but one of the Debenhams board, and either agree to underwrite a rights issue or provide funding on terms that would have to be agreed by Debenhams' lenders.
Should neither of these happen, the company’s ownership would transfer to the lenders, effectively wiping out equity shareholders, but allowing Debenhams to continue to operate.
