UK - Food company Uniq has attributed improved preliminary results to a deal over its pension liabilities.
Under a deal struck between the company and trustees in February over the scheme’s £142m (€160m) deficit, the pension fund acquired a 90.2% shareholding and a £14m final payment in return for releasing the sponsor from its obligations to the defined benefit scheme.
Current shareholders retain a 9.8% share in the AIM-listed company.
Posting interim results this week, the company said the deal - which incurred £2.7m in costs in 2010, with a further £3.1m anticipated during implementation - had resulted in a “balance sheet transformation”.
Chief executive Geoff Eaton told shareholders: “Having spent more than 18 months evaluating potential means of addressing the pension scheme deficits, the board is satisfied the proposed restructuring is the only viable way of enabling shareholders to achieve some value from their shareholdings in the company.
“Crucially, it is the only proposal which has met the requirements of the trustee, the pensions regulator and the Pension Protection Fund.”
He added that the likely alternative would be for the company to stop trading within12 months as banks pulled working capital, and the pensions regulator and trustees demanded settlement of the pensions deficit.
Chairman John Warren said: “The outcome is that Uniq can now look forward to a future in which its management can develop the potential of its businesses without the constraints imposed by the pension situation.”
The scheme, which grew out of the former UK dairy giant Unigate scheme with 40,000 members, retained the liabilities of that scheme when it broke away in 2000.
When Uniq itself split the following year, it was left with a 21,000-member scheme, but a considerably smaller business.
Despite an £87m attempt in 2007 to offset the deficit, market turbulence the following year sharply increased it.
The Pensions Regulator last year rejected an initial proposal following triennial discussions between the trustees and the company in March 2009.
The group has also faced stringent demands from suppliers on finance terms as a result of the withdrawal of credit insurance.
Eaton said the completion of the pension deal would improve the availability of credit insurance and signal a return to normal trading terms.