Dawson International PLC Rejection of Pension Proposals (1050I)
July 20 2012 - 2:00AM
UK Regulatory
TIDMDWSN
RNS Number : 1050I
Dawson International PLC
20 July 2012
AIM: DWSN
DAWSON INTERNATIONAL PLC
("Dawson International" or "the Group" or "the Company")
Rejection of Pension Proposals
The Board of Dawson International is disappointed to report to
shareholders that discussions with the Pension Protection Fund
("PPF") and the Pensions Regulator ("tPR") to seek a negotiated
entry of its UK defined benefit pension plans ("the Plans") into
the PPF have been unsuccessful with these bodies rejecting all
offers made by the Company.
The Company will now enter into discussions with the Plans'
Trustees and tPR to determine what its options are. Ultimately if
no agreement can be reached which is based on the continued trading
of the Group's businesses, and a binding schedule of contributions
is served on the Company which the Company is unable to fulfil in
the specified timescale, the Board would have no alternative but to
consider appointing administrators for all or part of the Group.
While the timescale for this process is unclear, the Company will
update shareholders as soon as further information becomes
available.
The Company has striven for many years to reduce the deficits on
the Plans, making contributions of GBP2.2 million in the last
financial year alone. Despite these efforts, the deficits have
widened, mainly due to changes in actuarial assumptions, and
associated costs have risen significantly. Against this background
the Company has been involved in protracted discussions with the
Trustees of the Plans, incurring over GBP1.4 million of advisory
fees in the past four years. After investigating all other
possibilities, it was concluded in May 2012 that there was no
alternative but to seek entry of the Plans into the PPF. This would
have meant the PPF assuming responsibility for the Plans in return
for a cash payment, loan note and equity stake in the Company. The
Board understood that the proposal would have had the support of
certain key shareholders who may have been prepared to inject fresh
capital to offer the PPF immediate cash rather than a loan note.
This is not an unusual transaction for the PPF. However, despite
the Company committing every available financial resource to
maximising the offer, providing terms that were significantly
better than the insolvency value as determined by independent
external experts, the PPF and tPR have deemed the proposal
unacceptable.
The PPFtPR have stated that the compensation offered by the
Company was insufficient in comparison to the size of the deficit
the PPF was being asked to assume. It is appropriate therefore to
note that:
-- The PPFtPR is using the s.75 (buyout basis) deficit as its
reference which is significantly higher than the s.179 (PPF
liability basis) deficit which the PPF would fund.
-- Scheme assets at March 2012 were GBP117.7m, GBP9.4m higher than at March 2011.
-- Scheme liabilities are valued on an actuarial basis which
fluctuates significantly and is outside the control of the
Company.
-- The Company simply has no more to offer.
The Board cannot understand this decision. The PPF and tPR have
rejected the best possible offer from the Company which provided
not only significantly more cash than is likely to be recovered
through an administration process but also the opportunity for
further value to be realised through part-ownership of a profitable
continuing business. The consequence is likely to be that the Plans
ultimately enter the PPF, with the PPF receiving lower
compensation, and furthermore approximately 200 jobs are put at
risk.
An update will be provided as soon as the Board has further
information.
David Bolton, Chairman of Dawson International, commented,
"We have worked tirelessly over the past four years in order to
achieve the best possible outcome for our pension scheme members
whilst also enabling our 140-year-old UK business to continue to
develop and invest.
We believe that our proposal provided significantly better,
guaranteed returns than insolvency and we are surprised by the
PPF's decision. In the event of administration, while we would
expect that a new owner would be found quickly, there remains a
real risk that a successful and profitable UK heritage business
will suffer from a period of uncertainty.
It should be a matter of wider concern that the UK pensions
reporting and regulatory environment can produce such an evidently
unsatisfactory outcome."
For further information please contact:
Dawson International PLC:
David Bolton, Chairman (Today) Tel: 020 3178 6378
Dave Cooper, Group Finance Director (Thereafter) Tel: 01450 365511
WH Ireland Limited:
Dan Bate / Katy Mitchell Tel: 0161 832 2174
Biddicks Financial Public Relations:
Zoe Biddick / Sophie McNulty Tel: 020 3178 6378
This information is provided by RNS
The company news service from the London Stock Exchange
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