GPG’s Coats stuck with $200 million fine
"You can bet that Coats Group is going to be a thorn in the side of GPG."
Featured commentGuinness Peat Group subsidiary Coats Group has lost its appeal against a €110 million fine for price fixing more than a decade ago.
Coats – now 100% owned by GPG – must pay the fine plus accrued interest, which amounts to €28 million.
The total bill is about €138 million, or $215 million at today's exchange rates.
Coats has maintained a provision of €45 million against the possible cost of this fine, leaving an additional €93 million to be provided and accounted for in Coats half year figures to 30 June 2012. The company said €65 million will be treated as an exceptional item within operating profit and €28 million will be treated as an exceptional interest cost.
The European Commission imposed the fine in 2007 for "an alleged market-sharing agreement" between Coats and William Prym GmbH & Co. between January 1977 and July 1998.
The businesses were found to have been co-ordinating price increases, fixing minimum prices, allocating customers, sharing markets and exchanging other commercially important and confidential information relating to the zips, snaps and rivets market.
The European General Court delivered its judgment overnight, dismissing Coats' appeal on all counts and upholding the €110m fine in its decision of September 19, 2007.
“Coats is extremely disappointed with the Court's decision and its legal counsel are considering whether there are any grounds for further appeal to the European Court of Justice,” GPG said in a statement on the London Stock Exchange.
“Coats maintains that the European Commission's allegations of a market sharing agreement in the European haberdashery market in the period from 1977 to 1998 are unfounded.”
GPG acquired full ownership of Coats in 2004, so the alleged collusion occurred long before Sir Ron Brierely’s company got involved.
Coats is the world’s largest supplier of industrial thread and consumer crafts and the world’s second largest zip maker. The British companyis by far GPG's largest investment, comprising nearly a third of its balance sheet.
GPG is in the process of winding up and selling its investment portfolio, with the exception of Coats, which it intends keeping unless a suitable offer is received.
Including €28m of interest accrued from the date of the original European Commission decision, the cost of this decision to Coats will be €138m. It has maintained a provision of €45m against the possible cost of this fine, leaving an additional €93m to be provided and accounted for in Coats half year figures to 30 June 2012; €65m will be treated as an exceptional item within operating profit and €28m will be treated as an exceptional interest cost.
Including €28m of interest accrued from the date of the original European Commission decision, the cost of this decision to Coats will be €138m. It has maintained a provision of €45m against the possible cost of this fine, leaving an additional €93m to be provided and accounted for in Coats half year figures to 30 June 2012; €65m will be treated as an exceptional item within operating profit and €28m will be treated as an exceptional interest cost.
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Comments and questions8
GPG's most attractive investment opportunity when a full takeover offer was launched.
Man, those turkeys headed by the senile old fool Brierley sure knew how to make even bigger turkeys of the investors who thought they were investing their funds with geniuses!
Investors will not be calm like buddha, which is what Chairman Rob Campbell suggested a few short months ago.
Man, did these Brierley boys do their Due Diligence re pending litigation, before they jumped in?
You can bet that Coats Group is going to be a thorn in the side of GPG, just like Thistle was, for BIL, when Paul Collins bought it over 2 decades ago.
What would be a "suitable offer" for Coats now?
Ronald 'MacDonald' Brierley, Tony "fat cat" Gibbs, Gary "even fatter cat" Weiss and Blake "fatties cat" Nixon must be roaring with laughter at how well they led all the GPG investors over the years astray even while they paid themselves tens of millions of dollars in salaries, bonuses and benefits.
Now they even have someone else do the cleaning up for them after they have finished feasting and left the dining table in an almighty mess.
Can't help but think that the very last laugh still belongs to some of the biggest con artists ever seen in Australasia.
Given the Directors stated in the Annual Reports and in media release that the company had made full provision for the fine it may be the UK FSA will be interested in hearing the directors definition vis the Oxford Dictionary definition of fully provided for. Fidcuary duty and all that stuff.
If GPG had been given the chance, it would have traded itself out of the doldrums after the GFC. But noooooo, people had to get all impatient and forget about 20 years of brilliant returns and kick out the old guard! I can assure you, as someone who sat next to Brierley, Weiss and Co, on a daily basis, they were geniuses. Look how much better GPG is going now....not!