GPG blames UK regulator for payout delay
Guinness Peat Group has accused Britain's pensions regulator of hindering the settlement of pension issues, which in turn could delay cash payouts to GPG's shareholders.
GPG advised the NZX today that a pensions probe by Britain's pensions regulator TPR into the Coats Pension Plan will not be concluded by the end of the year as GPG had previously announced.
The holdup will further delay cash payouts to shareholders as GPG re-forms into its remaining subsidiary Coats Group, a multinational thread manufacturer.
In quarterly update to the stock exchange last month, GPG said TPR was continuing to question the financial resources of its legacy pension schemes. Calculations showed the "sponsoring employers" of GPG's Staveley and Brunel pension schemes had not enough financial resources at the relevant time, GPG said, which meant the regulator could demand financial support from GPG.
It was not certain whether the Coats scheme was in the same position.
Last month GPG said the next step would be a warning notice from the regulator and "based on previous communication with [the regulator], the board currently anticipates receiving any such [warning notices] by the calendar year-end".
But TPR has since stated it was looking to decide whether or not to issue a warning notice in relation to the Coats Plan "as soon as practicable".
However GPG said any warning notices for the Brunel Holdings Pension Scheme and the Staveley Industries Retirement Benefits Scheme were still expected by year-end.
Should a warning notice be received, a formal process would begin which could take years to conclude and prevent GPG distributing up to £404 million (NZ$812m) in cash to shareholders, unless a settlement is reached.
GPG said last month the pensions review had cost the company £8m (NZ$16.1m) so far and it estimated costs would total £10m by the end of the year.
Rob Campbell, chairman of GPG, said in a statement today that the GPG board was "deeply concerned that despite the enormous cost and management effort which the regulatory intervention is imposing on both GPG and Coats, we are still not close to a conclusion of these matters".
"It is and will remain a principle of the GPG transition process that there be fair and compliant settlement of pension issues," he said.
"The regulatory intervention is hindering rather than assisting such settlement."
Campbell added that GPG was continuing to seek resolution and that "every avenue to achieve the transition in the best interests of shareholders and the ongoing business of Coats is being pursued".