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GPG mulls ways to bridge pension liability

Tuesday 10th July 2012

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Guinness Peat Group's board is looking at ways to meet the investment firm's pension obligations as its winds down its portfolio, having reached a 20.3 million pound settlement to cover the funding deficit of one of the Staveley scheme.

Of the settlement, GPG will put up 15.4 million pounds in cash over the next eight years, starting with a 5 million pound contribution, with the remainder covered by returns from its investment portfolio.

GPG faces a 130 million pound contingent claim over its assets by the trustees of the Staveley and Brunel pension schemes, which limits the board's ability to "distribute in the medium term asset realization proceeds of an equal amount," the company said in an emailed statement.

"While the GPG board is endeavouring to identify the best long-term solution for this issue, there is clearly some uncertainty as to the value that can be ascribed to these assets at the present time," the company said.

GPG flagged the risk of those pension liabilities last year as globally low interest rates increase the potential liability of the schemes.

In March, institutional investor BT Funds lifted its holding in GPG when the stock fell to a record-low 45 cents, indicating the fund manager had confidence in the value of threadmaker Coats, the firm's biggest asset.

Coats has since lost an appeal in the European Court of Justice over market-fixing, and faces fines and penalties of 138 million euros.

GPG's stock was unchanged at 45.5 cents today, having shed 22 percent this year. It is rated an average 'outperform' based on a consensus of six analysts compiled by Reuters, with a median target price of 65 cents.

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