Coats Group PLC Pensions Update (0201S)
December 16 2016 - 1:00AM
UK Regulatory
TIDMCOA
RNS Number : 0201S
Coats Group PLC
16 December 2016
16 December 2016
Coats Group plc
Cessation of UK Pensions Regulator's regulatory action for two
of the three pension schemes
Coats Group plc (the 'Company'), the world's leading industrial
thread manufacturer, today announces that it has signed heads of
terms with the Trustees of the UK Coats Pension Plan and Brunel
Holdings Pension Scheme (the 'Settlement'). In addition, the
Company has received written assurances from the UK Pensions
Regulator ('TPR') that it will cease its regulatory action in
relation to these two schemes under the Warning Notices that it
issued to the Company in 2013 and 2014, subject to binding
Settlement agreements being concluded on terms consistent with
these heads of terms and which are satisfactory to TPR.
Completion of the documentation and internal and regulatory
steps required to finalise the Settlement is anticipated early in
the New Year. The Coats Pension Plan and Brunel Holdings Pension
Scheme represent approximately 90% of the Company's UK pension
liabilities(1) and schemes' members.
The Company has made proposals to the Trustees of each of the
three UK schemes (including the Staveley Scheme), on a comparable
basis, comprising (1) upfront payments totalling GBP329.5 million
($415 million(2) ) from the Company's parent group cash (inclusive
of the agreed Recovery Plan contributions paid to the Brunel and
Staveley schemes since 1 January 2016); and (2) annual deficit
recovery contributions totalling GBP17.5 million ($22 million)
including estimated administration expenses and levies.
The principal commercial terms of the Settlement with the Coats
Pension Plan and Brunel Holdings Pension Scheme are:
-- Financial support on the basis of a combined technical
provisions deficit as at 1 April 2015 of GBP485 million ($611
million) to be repaired by:
a) upfront payments totalling GBP255.5 million ($322 million)
from the Company's parent group cash paid directly into the schemes
(inclusive of the agreed Recovery Plan contributions paid to the
Brunel scheme since 1 January 2016); and
b) annual deficit contributions totalling GBP14.5 million ($18
million), including estimated administration expenses and levies to
be paid until 2028.
-- The schemes will have access to sponsor support from Coats
for future funding needs together with a Company guarantee.
-- The next triennial valuation date for these schemes is to be 31 March 2018.
Once Settlement with the Coats Pension Plan and Brunel Holdings
Pension Scheme Trustees is completed and TPR has ceased its
regulatory action in respect of those two schemes, the Board will
lift its previously announced restriction on distributions and its
dividend policy will be announced in due course.
The Trustee of the Staveley scheme has not to date accepted the
Company's proposal regarding that scheme and currently TPR's
investigation in connection with that scheme remains open. The
proposal remains open to the Trustee of the Staveley scheme and the
remaining parent group cash will be reserved for this purpose.
Mike Clasper, Chairman, said:
'This is a good outcome for all parties involved. We have
consistently stated that we would do the right thing by our pension
scheme members balancing the interests of all our stakeholders. I
believe what we are announcing today does just that. The settlement
allows us to pay dividends to our shareholders, whilst retaining
sufficient cash to continue to invest in growth opportunities. At
the same time, we remain committed to fulfilling our continuing
obligations to our pension schemes and their members and concluding
a settlement for the Staveley Scheme. Coats can now fully focus on
growing the business for the benefit of all its stakeholders.'
_________________________________________________________________________________________
Enquiry
details
Coats Group +44 (0)20 8210
Investors Jaideep Thatai plc 5086
Richard Mountain +44 (0)20 3727
Media / Nick Hasell FTI Consulting 1374
_________________________________________________________________________________________
This announcement contains inside information for the purposes
of the Market Abuse Regulation.
About Coats Group plc
Coats is the world's leading industrial thread manufacturer and
a major player in the Americas textile crafts market. At home in
more than 60 countries, Coats employs 19,000 people across six
continents. Revenues in 2015 were US$1.5bn. Coats' pioneering
history and innovative culture ensure the company leads the way
around the world: providing complementary and value added products
and services to the apparel and footwear industries; applying
innovative techniques to develop high technology Speciality threads
and yarns in areas such as automotive and fibre optics; and
extending the crafts offer into new markets and online.
Headquartered in the UK, Coats has a premium listing on the London
Stock Exchange. To find out more about Coats visit
www.coats.com.
Background to UK Pensions Regulator investigations
During 2013 TPR began investigations into Guinness Peat Group's
(as Coats Group plc was then known) three UK pension schemes. In
December of that year TPR issued Warning Notices in respect of the
two legacy schemes - Brunel and Staveley - and in December 2014
issued a Warning Notice in respect of the UK Coats Pension Plan.
From 2013 onwards, all parties proceeded down a legal process set
out by regulations governing TPR's procedures. During 2015 the
Company was renamed Coats Group plc and a number of Director
changes were made. In February 2016 Coats initiated settlement
discussions with the three sets of trustees and committed to retain
the entire parent group cash balance within the Group to support
the schemes. This cash balance is the net proceeds generated from
Guinness Peat Group's asset realisation programme between 2011-2013
when it sold its share in approximately 50 businesses leaving Coats
as the only remaining operating business.
1. IAS19 liabilities as at 30 June 2016
2. US dollar figures at 14 December 2016 closing GBP:USD rate of
1.26
This information is provided by RNS
The company news service from the London Stock Exchange
END
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