Cessation of TPRs regulatory action for the Staveley pension scheme
Further to the announcements of 16 December 2016 and 17 February 2017, Coats, the world’s leading industrial thread manufacturer and a major player in the Americas textile crafts market, today announces that it has signed a binding Settlement agreement with the Trustee of the Staveley Industries Retirement Benefits Scheme. Coats has received written assurances from the UK Pensions Regulator that its regulatory action will automatically cease in relation to Staveley under the Warning Notice that it issued in 2013 upon completion. Completion will occur by early July 2017.
The principal commercial terms of the Staveley Settlement are financial support on the basis of a technical provisions deficit as at 5 April 2015 of £97 million ($123 million*) to be repaired by:
a) an upfront payment of £74 million ($94 million) from Coats' parent group cash paid directly to Staveley (inclusive of the agreed Recovery Plan contributions of £39.5m paid to Staveley since 1 January 2016)
b) annual deficit contributions of £2.2 million ($2.8 million) plus payment of administration expenses and levies, an estimated annual total of £3.0 million ($3.8 million), to be paid until 2028.
In common with the Settlement with the Coats and Brunel pension schemes, Staveley will have access to sponsor support from Coats for future funding needs together with a Company guarantee.
Combining the Staveley Settlement and the settlements reached with the Coats and Brunel pension schemes earlier in the year the principal commercial terms are:
· Financial support on the basis of a combined technical provisions deficit as at April 2015 of £582 million ($739 million) to be repaired by:
a) upfront payments totalling £329.5 million ($418.5 million) from the Company’s parent group cash paid directly into the schemes (inclusive of the agreed Recovery Plan contributions paid to the Brunel and Staveley schemes since 1 January 2016); and
b) annual deficit contributions totalling £17.5 million ($22.2 million), including estimated administration expenses and levies to be paid until 2028.
· The next triennial valuation date for the three schemes is to be 31 March 2018.
As a result of the settlements reached with the three schemes, the total cash Recovery Plan contributions in 2017, including estimated administration expenses and levies, are expected to be £290m ($368m). This comprises £270m ($343m) upfront payments and £20m ($25m) annual deficit contributions, including estimated administration expenses and levies. These cash payments continue to be excluded from the Group’s adjusted Free Cash Flow.
Mike Clasper, Chairman, Coats, said ‘Reaching this Settlement with Staveley is a good outcome for all parties involved and following our announcement earlier this year, it now completes settlement with all three of our UK pension schemes. This, together with our recent entry to the FTSE 250, means Coats can continue to focus on growing the business to the benefit of all our stakeholders.’
* US dollar figures at 22 June 2017 GBP:USD rate of 1.27.