Dawson enters administration after PPF rejects offer
UK - Scottish textile manufacturer Dawson International has entered administration after it failed to reach an agreement with the Pension Protection Fund (PPF) to relieve the company of its pension obligations.
According to the most recent figures for April last year, the company's scheme reported a deficit of £11.5m (€14.6m), likely to have risen since due to the impact of falling UK Gilt yields.
Dawson reported late last month that its negotiations to see its £118m pension scheme enter the PPF without entering administration had been rejected by both the lifeboat fund and the Pensions Regulator, with chairman David Bolton remarking at the time: "It should be a matter of wider concern that the UK pensions reporting and regulatory environment can produce such an evidently unsatisfactory outcome."
Last Wednesday, trading of Dawson's shares was suspended on the London Stock Exchange, with an announcement today that KPMG would be appointed as administrator after the company was "left with no option", according to a statement.
However, the PPF's executive director for financial risk Martin Clarke defended the decision not to sever the link between Dawson and the scheme.
"On rare occasions, we will - alongside the Pensions Regulator - consider transactions that allow a company to continue to operate with the pension scheme being taken on by the PPF," he said, in a likely reference to agreements between pension schemes for airline BMI, recently sold by Lufthansa.
"We do not enter such arrangements lightly and only agree them if a number of stringent tests are met," he added.
"Unfortunately, in this case, the offers made to take on the pension scheme, given the size of the deficit in the scheme, were inadequate."
Dawson had previously attempted to agree a debt-for-equity swap with the regulator, saying in a statement in late June that attempts for its DB scheme to enter the PPF in return for a cash payment, loan note and equity stake in the company had been deemed unacceptable.
Protracted funding negotiations eventually saw the Uniq pension fund assume a controlling stake in its sandwich-maker parent company in an effort to stave off its insolvency, with the shares eventually sold to a rival Irish company.
The proceeds were used to fund a £830m buy-in rather than entering the PPF.
Dawson International stressed in its statement to the London Stock Exchange that while it and the UK holding company had entered administration, US business Dawson Forte was "well funded and continues to trade normally".