22 Dec 2014: Third warning notice for Guinness Peat
The Pensions Regulator has issued a warning notice to Guinness Peat Group plc in an attempt to force it to provide greater support for the Coats Pension Plan.
GPG is an investment holding company listed on the London, Australian and New Zealand Stock Exchanges.  In 2011 it announced its intention to realise its investment portfolio leaving just thread manufacturer, Coats plc, as the only operating asset.  GPG’s plan to distribute the proceeds of the realisation has been delayed by the intervention of TPR.

The notice is the latest step in a long-running investigation into three schemes within the GPG group.  In 2013, TPR issued warning notices to GPG relating to its two other schemes, the Staveley and Brunel schemes, which have also been left within the group following the realisation.  The notices indicate that in the case team's view the schemes may be insufficiently resourced and it may be reasonable for TPR’s Determinations Panel to issue Financial Support Directions.

GPG will try to fend off the latest warning notice by negotiating with TPR but if that fails the Determinations Panel will consider the matter most likely in 2016.  GPG has indicated any Panel hearing in relation to the Brunel and Staveley schemes is unlikely to be until the second half of this year at the earliest.

Argyll comment: TPR’s concern in this case appears to be that the payment to shareholders of the proceeds from the asset realisation could leave the remaining schemes without sufficient support.  With Coats being the only operating business remaining in the group there is also presumably the risk that Coats effectively ‘inherits’ the other two schemes, a concern for the Coats trustees.

Warning notices against ongoing businesses are rare – the only other example (in the public domain at least) was in relation to the Great Lakes (UK) Limited Pension Plan in 2010.  Other potential FSD cases have involved insolvent groups such as Lehman Brothers and Nortel.  The case is of particular interest therefore as it could involve potentially three FSDs against the same solvent group.

The level of adviser fees spent by GPG on this matter has come under public scrutiny, with many commentators criticising as excessive the £10m spent so far and a further £8m provided for (as per GPG’s half year interim report).  It would seem beneficial to all if a deal can be reached soon given the means to provide support is on GPG’s balance sheet as cash and to avoid incurring further adviser fees which could otherwise be used for the benefit of the schemes.

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