Convenience food maker Uniq has devised a unique way of resolving its crippling pension deficit – by effectively selling itself to its pension trustees.
The firm, which supplies sandwiches to Marks & Spencer, is waiting on regulatory clearance to finalise a deficit for equity swap that will sign over 90 per cent of the firm to the pension scheme.
Existing shareholders will be left holding the remaining 10 per cent of the shares. The deal looks set to prevent a winding-up order that looked almost certain to take effect after the firm’s pension deficit spiralled to £436m. Pensions expert Fraser Smart, managing director of Buck Consultants, told City A.M. the deal is a temporary respite but will raise interesting regulatory questions.
He said: “From the company’s perspective this deal is likely to be attractive since it can focus on running its business rather than the distraction that the pension scheme has been in recent years. However owning 90 per cent of the business means the trustees have control which is likely to lead to some interesting governance issues around conflicts of interest.”
Uniq, whose chief executive is Geoff Eaton, also reported its third-quarter operating profit was slightly higher than expected, sending its shares up seven per cent.
Advising Uniq on the unusual deal were bankers from Lazard. The bank’s corporate advisory arm has a long standing relationship with Uniq.
Bankers Peter Kiernan and Virginie Morgon both worked on the disposal of Uniq’s French spreads business for €370m (£325m) in 2006.
Investec also helped sift through the intricacies of the deal to set up the Deficit for equity swap.
The complex negotiations also required specialist pensions advice, which was provided by occupational pensions experts at Hymans Robertson. BDO Pensions Advisory were also involved in helping strike the deal from the pensions side.
Slaughter & May was the legal adviser on the deal.
Newly-merged financial PR firm MHP Communications is handling the public relations account for the chilled food specialist.