The 21,000 members of the troubled Uniq pension scheme are set to receive higher retirement benefits as a result of a landmark deal completed yesterday.
The sandwiches and desserts maker was effectively put “in play” after the pension fund announced that it was taking advice on selling its newly acquired 90 per cent stake in the business.
The fund, which has a shortfall of about £360 million, has just finished swapping its conventional claim on Uniq for the majority stake in the company.
Shares in the company began trading on AIM yesterday, for the first time putting a value on the company unencumbered by its former vast pension liabilities. The shares closed at 67p, valuing the company at £78.5 million and the pension fund’s stake at £70.8 million.
Chris Martin, the independent chairman of the pension trustees, said that if the fund could achieve a selling price of that much or more for the stake, it could avoid seeking a rescue from the Pension Protection Fund, the industry lifeboat. Instead, it could seek a so-called buyout from an insurance company, which would lead to higher retirement benefits for members.
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Schemes rescued by the PPF pay scheme members only about 90 per cent of their promised benefits if they are under 62. All members also lose because benefits are not well inflation-proofed. “If the stake could be sold for £60 million or £70 million, we’d be above PPF levels,” Mr Martin said.
Last week the scheme entered the early stages of PPF protection, but it can still pull out and seek an insurance buyout instead. It owns about £600 million in government bonds, while having to meet pension promises of about £950 million. Even with a buyout the pension fund members, who include thousands of former Unigate milkmen, will still not receive the entire pensions they were originally promised.
The scheme has hired the advisory boutique Spayne Lindsay to examine options including selling its entire stake, a sale that would automatically lead to the buyer making a bid for the whole of Uniq under stock market rules. Potential trade buyers include Northern Foods, the Icelandic-owned Bakkavör (the old Geest), Kerry Group, of Ireland, and the family-owned Samworth Brothers, which owns the Ginsters brand.