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

END

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