Guinness Peat Group will have to keep on more staff than previously planned as it works with the UK regulator over its liability for the Coats pension schemes.
Chairman Rob Campbell told shareholders in Auckland the investment firm will have to keep certain corporate functions at GPG for longer than it intended as it figures out what level of funding it will have to provide the pension schemes.
As at December 31, the pension fund shortfall was valued at £281 million, with low global interest rates eroding theoretical future returns relative to its expected liabilities.
GPG's best case scenario is that it would not have to provide further support above the £124 million flagged, but is waiting on the UK Pensions Regulator's review as to whether the investment firm should provide more support.
The worst outcome for GPG would see a "substantial" exposure, which is considered as being remote chance, and a settlement is also an option the board is considering, Mr Campbell says.
"We recognise that this process has introduced an unwelcome level of uncertainty into the transition and capital return process. The board is very focused on the matter and we are committed to ensuring shareholders are fully updated as to the process and its implications."
Once the pensions investigation is completed, the GPG board will cut its workload until portfolio liquidation is completed, which will remove the need for separate GPG and Coats boards, he says.
Mr Campbell told shareholders their GPG investment should be viewed as the cash held by the company, minus any support Coats needs, plus whatever is realised from the Tower investment, and then the ongoing value in Coats.
GPG is expected to rebrand into the Coats unit this year, and MrCampbell says the UK threadmaker will keep its Australian and New Zealand listings "so long as substantial portions of equity are held here".
The shares fell 1.9 percent to 50.5 cents and have shed 13 percent this year.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Rocket Lab has lift-off, but doesn't make it to orbit
- Crimson Consulting scholarship for Maori could be better, says Fox
- Budget 2017 at a glance
- Kiwi business traveller stranded in San Francisco after United de-planes his wallet and passport
- Budget 2017: Mental health at centre of government’s $321m social investment package
Most listened to
- NBR's Rob Hosking with budget analysis. No lolly scramble but sweeteners aplenty
- Grant Thornton tax partner Murray Brewer with his take on the tax package
- NBR’s Calida Smylie talks to CTU policy head Bill Rosenberg in the Budget 2017 lock up
- OMF Financial’s Nigel Brunel discusses the economic implications of the Budget
- MetroGlass CEO Nigel Rigby on the outlook and market share position
- David Seymour gives Gareth Morgan a serve as the latest political party donations are disclosed
- NBR Radio: best of the week ended May 19, with Grant Walker