Landmark pensions agreement between Premier Foods plc and Premier Foods Pension Scheme (PFPS), of which LawDeb’s Michael Chatterton is Chair
Following an extensive strategic review, Premier Foods plc’s Board announces a landmark agreement with its pension schemes which will significantly improve the Group’s pension funding situation and capital structure.
In particular, the Board and pension trustees expect this will provide greater funding certainty for Premier Foods pension schemes members by leveraging the strength and scale of the successful RHM pension scheme investment strategy. The net present value (NPV) of the pension deficit contributions could reduce from the current £300-320m by up to approximately 45% to £175-185m.
This transformational agreement is a segregated merger of all the Group’s pension schemes, which will place all the UK defined benefit schemes under one Trust.
Once the RHM pension scheme executes a buyout, a surplus could then be able to be passed to the remaining schemes in deficit, and so would result in a vastly improved funding position of these schemes. The merger also provides an opportunity to improve the security available to all the schemes involved.
The merger is subject to agreeing definitive legal documentation with the scheme Trustees, with implementation expected by the end of June 2020.
Duncan Leggett, Chief Financial Officer of Premier Foods, confirmed, “This is an innovative and ground-breaking initiative to address pension funding that is delivering huge value for the members and for the company.
Law Debenture, in particular Michael Chatterton and Alan Baker, have been instrumental in working with the company to develop this strategy and help bring it to conclusion.”
Michael Chatterton, Managing Director of LawDeb Pension Trustees and Chair of the Premier Foods Pension Scheme, commented, “We firmly believe this new pensions agreement represents a more secure future for the Group’s pension scheme members.
When considering the challenges for the Premier Foods Pensions Schemes we took a holistic approach. This led us to consider how to leverage the scale and strong position of the RHM scheme for the benefit of the other scheme members as well as the Company and its shareholders.”
Alan Baker, Director of LawDeb Pension Trustees, added, “As you’d expect this is the result of very significant discussions with a range of advisors and developing this approach has been an exciting collaboration between the trustees of all 3 schemes and the company.
It builds on a clear alignment of interests where Premier Foods plc is looking to provide the security that will enable the RHM trustees to continue to build on their successful investment strategy for the benefit of all 3 schemes.”