COATS GROUP PLC
GPG
22/12/2014 08:31
GENERAL
PRICE SENSITIVE
REL: 0831 HRS Guinness Peat Group Plc
GENERAL: GPG: Coats Pension Plan Update
22 December 2014
Guinness Peat Group plc
('GPG' or 'the Company')
Coats Pension Plan update
GPG, whose sole operating business is Coats plc, announces that on 19
December 2014 it received a Warning Notice ('WN') from the UK Pensions
Regulator ('tPR') in relation to the Coats Pension Plan ('the Coats Plan').
The Warning Notice sets out tPR's case team's view that sponsoring employers
of the Coats Plan were insufficiently resourced at the relevant date (31
December 2012) and that it may be reasonable for the Determinations Panel of
tPR to issue a Financial Support Direction ('FSD') in relation to the Coats
Plan against specified targets, namely the Company, GPG (UK) Holdings plc and
Coats plc.
The Board is reviewing the Warning Notice with its advisers and will have an
opportunity 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.
If the matter is not resolved through negotiation, it will be independently
considered by the Determinations Panel ('DP') of tPR. Any hearing before the
DP in relation to the Coats Plan is unlikely to take place before the first
half of 2016, at the earliest. If an FSD is issued by the DP, the matter may
then be referred to the Upper Tribunal which would consider it fully afresh.
Mike Clasper, Chairman of GPG said: 'As previously indicated the Board,
having taken external advice, submitted calculations to tPR which showed that
all the 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. Coats continues to demonstrate its ability to support the Coats
Plan from its operating cash flows, while generating the levels of free cash
needed to sustainably grow the business.
'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. We will be
vigorously defending our position, taking into account the interests of
shareholders, pensioners and the overall Coats business.'
Brunel and Staveley
At the end of September 2014, and in accordance with tPR's deadline, GPG
submitted written representations on the Warning Notices the Company received
in relation to the Brunel and Staveley pension schemes. As previously
indicated, any hearing before the DP in relation to these two schemes is
unlikely before the end of the first half of 2015 at the earliest.
The Board and management continue to engage constructively with tPR and are
maintaining an open dialogue with the trustees of the relevant pension
schemes. All options are being explored to try to resolve these matters as
efficiently as possible, recognising the interests of shareholders, pension
scheme members and Coats' business.
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.
Enquiry details:
New Zealand and Australian media Geoff Senescall +64 9 309 5659
UK media Nick Hasell +44 20 3727 1234
Notes
An FSD is a direction that would require financial support (which is not
necessarily a cash contribution) to be put in place for a pension scheme.
Even where the sponsoring employer is deemed to be 'insufficiently resourced'
by tPR's case team, an FSD may still only be issued by the Determinations
Panel if it can demonstrate that it is 'reasonable' to do so.
End CA:00259219 For:GPG Type:GENERAL Time:2014-12-22 08:31:12
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