UK - Food manufacturer Uniq has proposed a deficit-for-equity swap to its pension fund trustees in a deal that would see the fund take control of 90% of company shares.
The proposal comes after the Pensions Regulator (TPR) rejected an earlier suggestion for a contribution holiday until 2013, leaving Uniq to pay only the £5m annual fees to the Pension Protection Fund.
Under the new plans, which have yet to be agreed with either shareholders or TPR, Uniq would start a deficit-for-equity swap and the company would be re-leveraged, eventually resulting in its shares being bought back from the fund.
Along with the transfer of 90% of company shares to the pension fund, the agreement would also see Uniq lose its status as fund sponsor, allowing it to actively pursue new funding without having to use it to pay off the £436m deficit.
Antony Barker, managing director of Pension Capital Strategies, said the company's relinquishing its role as fund sponsor meant it would no longer be viewed as a poison pill by capital markets.
"Going forward," he added, "the company can decide to either pay back what is needed in terms of the recovery plan, or the vehicle can realise the options for cash to actually put the money into the plan instead."
Barker predicted TPR would look on the funding proposal more kindly, as it would allow it to keep the pension plan out of the Pension Protection Fund and "put a tick in the box and say 'we've done something right here'".