WH Smith to boost pension fund

STRUGGLING retailer WH Smith is to inject £120m into its pension fund, more than halving the deficit that last week forced venture capital firm Permira to abandon its bid plans.

The group also confirmed that it is to sell or demerge its Hodder Headline publishing arm in a move that could be worth more than £200m.

And it cheered shareholders with the promise that the proceeds will be returned to them, which analysts said could be up to 90p a share.

New chief executive Kate Swann said that since the Permira approach there had been 'a number of expressions of interest' in the publishing operation and that talks are under way with several potential buyers.

The £120m one-off payment into the pension scheme will be made once Hodder Headline is divested, and a new £120m borrowing facility has been arranged to cover the move. It will halve Smith's annual payments into the fund from £42m to around £21m.

Permira abandoned its bid plans because of the prospect of having to make additional pension payments if the deficit widened.

Meanwhile, current trading is in line with expectations, Swann said, and cost savings of £30m have been targeted by the financial year ending August 2007.

She reiterated her determination to return Smith to its role as 'the country's most popular stationer, bookseller and newsagent'.