Trinity Mirror offers £41.2m cash for Northern & Shell pensions in planned M&A
The newspaper publisher is offering a one-off upfront £41.2m cash payment and £29.2m deficit recovery plan for the Northern & Shell defined benefit (DB) schemes as part of its planned acquisition.
Following its recent offer to acquire Northern & Shell for £126.7m, Trinity Mirror said on 9 February in an announcement on the stock exchange that the pension deal would imply an enterprise value of £184.2m.
The deficit contribution recovery plan agreed over nine years until 2027 includes annual contributions of £1.9m from 2018 to 2020, £4.1m each year from 2021 to 2023, £3.3m from 2024 to 2026, and finally £1.3m in 2027.
Trinity Mirror would take on the £834.8m liabilities (on an actuarial basis) as of Northern & Shell's three pension schemes: the Express Newspapers 1988 Pension Fund, Express Newspapers Senior Management Pension Fund and the West Ferry Printers Pension Scheme.
The acquisition package would also include a revised dividend-sharing policy for the schemes, including the three sponsored by Trinity Mirror.
At their last triennial valuations, the schemes had a deficit of £63.6m with assets worth £771.2m. The total deficit on an IAS 19 accounting basis was £31.3m on 31 December 2016.
Trinity Mirror also published its trading update, which showed a £622.2m total actuarial deficit across the Trinity Mirror MGN Pension Scheme, Trinity Retirement Benefit Scheme and the Midland Independent Newspapers Pension Scheme, at their 31 December 2016 triennial valuations, which were finalised this January, with £2.1bn of total liabilities. The total deficit has increased by more than 40% from £395.3m in the 31 December 2013 valuations.
Trinity Mirror also said the IAS 19 accounting deficit at 31 December 2017 had fallen to £378m from £88m at the 2016 year-end, driven by strong asset returns and a change in mortality assumptions partially offset by further falls in discount rates. Last year, PP reported the aggregate IAS 19 deficit of Trinity grew by 52% over 2016.
Trinity Mirror said that following comprehensive engagement with The Pensions Regulator, the watchdog "considers this package to be appropriate". The statement also said the watchdog was working with all relevant parties to assess the impact of the potential transaction on all six pension schemes if relevant, and what mitigation would be appropriate, as TPR set out in a letter sent to Work and Pensions Committee chairman Frank Field last November.
Commenting on the proposed transaction, Northern & Shell chairman Richard Desmond said: "Today's transformational transaction is a logical and natural next step in the evolution and consolidation of the media sector and will create a larger and stronger platform serving all stakeholders."
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