UK - Food manufacturer Uniq has been given permission by the Pensions Regulator (TPR) to initiate a debt-for-equity swap with its occupational pension scheme.
The agreement, first mooted last year after the regulator rejected plans for a three-year contribution holiday, means Uniq can avoid an estimated £400m (€470m) buyout and will see a 90.2% stake in Uniq transferred to the scheme, with a new company assumung its current role as sponsor.
The agreement means Uniq will no longer have any obligations toward the pension fund and be better positioned to seek refinancing from banks.
Jonathon Land of PwC said that while the agreement was a sensible commercial approach, the industry was unlikely to see a wave of such deals.
"It's a massively valuable tool for companies and pension schemes," he said. "It will be used in certain circumstances, but it's not going to replace all other tools that exist."
He noted that such restructurings would potentially create greater value in the long term, as a company would be given a chance to prosper - meaning former occupational pension schemes could continue to pay out higher benefits, rather than being entered into the Pension Protection Fund.
As part of the agreement, Uniq will also make a one-off payment of £14m and suspend its listing on the stock exchange in March, moving to AIM instead.
Geoff Eaton, chief executive at Uniq, said receiving permission for the restructuring was the result of 18 months of negotiations with TPR.
"The pension solution will release the business from the huge legacy pension burden, while realising the best possible outcome for pension members and achieving some value for our shareholders," he said.
Chairman of the trustees Chris Martin added that the board had concluded the restructuring offered the best possible outcome for the scheme and its members.
Under IAS19, the scheme had a £229m deficit in June last year, with the total cost of a buyout estimated to be £428m by Uniq.
The company had an estimated market capitalisation of £30m.