Toys R Us is urgently pursuing £120m in funding to pay off loans and overhaul its store estate as the retailer fights for survival.

The UK arm of the business, which is being eyed by turnaround specialist Hilco, has appealed to its investors for a financial lifeline ahead of payment deadlines at the end of this month.

According to The Telegraph, the retailer has asked prospective new buyers to put up £50m upfront to pay off a consortium of bank lenders led by JP Morgan, which have bankrolled its US parent company.

Toys R Us’ American owners gained access to $2.2bn (£1.6bn) from lenders upon entering bankruptcy protection in September.

According to sources close to the situation, the struggling retail group’s UK subsidiary is also seeking £70m in the first year of new ownership to finance a major overhaul of its existing store estate and sharpen up its price proposition.

The retailer won approval from creditors for its survival plan in December, which included closing 26 loss-making stores and axing 800 jobs.

Toys R Us has also informed prospective buyers that it would reduce headcount by a further 20% and cut its stock range by 10% to lower costs.

The retailer also plans to reduce the floor space of the 79 stores not affected by its store cull by more than a third and pursue rent reductions.