GPG considers how to bridge huge pension liabilities
GPG faces a £130 million contingent claim over its assets by the trustees of the Staveley and Brunel pension schemes.
BUSINESSDESK: Guinness Peat Group's board is considering how to meet the investment firm's pension obligations as its winds down its portfolio, having reached a £20.3 million settlement to cover the funding deficit of one of the Staveley scheme.
Of the settlement, GPG will put up £15.4 million in cash over the next eight years, starting with a £5 million contribution, with the remainder covered by returns from its investment portfolio.
GPG faces a £130 million contingent claim over its assets by the trustees of the Staveley and Brunel pension schemes, which limits the board's ability to "distribute in the medium term asset realisation proceeds of an equal amount", the company said.
"While the GPG board is endeavouring to identify the best long-term solution for this issue, there is clearly some uncertainty as to the value that can be ascribed to these assets at the present time," it said.
GPG flagged the risk of those pension liabilities last year as globally low interest rates increase the potential liability of the schemes.
In March, institutional investor BT Funds lifted its holding in GPG when the stock fell to a record-low 45 cents, indicating the fund manager had confidence in the value of threadmaker Coats, the firm's biggest asset.
Coats has since lost an appeal in the European Court of Justice over market fixing and faces fines and penalties of 138 million euros.
GPG's stock was unchanged at 45.5 cents today, having shed 22% this year. It is rated an average "outperform" based on a consensus of six analysts compiled by Reuters, with a median target price of 65 cents.
Paul McBeth
Tue, 10 Jul 2012
Tue, 10 Jul 2012
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
GPG considers how to bridge huge pension liabilities
22034