Guinness Peat warned in UK over scant resources for pension plan
The UK’s Pensions Regulator has given the Guinness Peat Group (GPG) an official warning about insufficient resources for the pension plan of its operating business – thread-maker Coats.
In a warning notice (WN), the UK watchdog (TPR) said sponsoring employers of the Coats Pension Plan did not have enough resources at the end of December 2012, and that its determinations panel (DP) may issue a financial support direction (FSD) against the company and Coats.
An FSD forces an employer to put financial support in place for an underfunded scheme.
It is one of the measures the regulator can take when it believes an employer is deliberately attempting to avoid its pension obligations.
However, Mike Clasper, chairman at GPG, said: “We do not believe the Coats Plan requires additional support over that which is already being provided by the Coats business, and we do not accept it is reasonable for TPR to issue a WN in relation to the Coats Plan.”
He said GPG would be “vigorously defending” its position, taking into account the interests of shareholders, pensioners and the overall Coats business, and that the board had showed TPR that all sponsoring companies for the Coats plan were sufficiently resourced as at the relevant date.
“It is therefore extremely disappointing to receive the WN from TPR in relation to a scheme for which a recovery plan was agreed with the trustees in 2013,” Clasper said.
GPG, which is listed in London, Australia and New Zealand, has been in the process since 2011 of disposing all its investments, and Coats is now the only company it owns.
It plans to change its name to Coats, with the newly re-named company then assuming the stock exchange listing of GPG, but it is putting these plans on hold until the issues with TPR are resolved.
GPG is already in dealings with the regulator over the Brunel and Staveley pension schemes it is responsible for – both connected with businesses the group previously owned.
The group said it had submitted written representations on the warning notices it received from TPR at the end of September, and that any hearing before the DP about these schemes was unlikely to happen before the end of the first half of 2015.
In results for the first half of 2014, GPG repeated that it was ready to put £124m (€158m) aside to support the Brunel Holdings Pension Scheme and the Staveley Industries Retirement Benefits Scheme.
At that point, the schemes had IAS19 deficits of £35m, while the Coats plan was £108m in the red.
“Once these matters are clarified, the board expects to run an appropriately leveraged balance sheet and pay annual dividends to shareholders from free cash flows generated by the Coats group,” GPG said.
GPG said its board was reviewing the warning notice about the Coats plan with its advisers and would have the chance to make written submissions to TPR in response.
“It is too early to know if an FSD will be issued or of the amount or form of any support that may be required for the Coats plan,” it said.
If negotiations fail, the case will be considered by DP, it said, adding that any such hearing is unlikely to happen before the first half of 2016.
If an FSD were to be issued, the matter might then be referred to the regulator’s upper tribunal, which would consider it “fully afresh,” the group said.
A spokesman for TPR confirmed only that a warning notice had been issued to GPG but declined to provide further details.