Michael Bow looks at the background to The Pensions Regulator's decision to issue a financial support direction against five ITV group companies.
ITV’s sumptuous costume drama Downton Abbey has a budget of £12m but the broadcaster could face a much bigger financial bill with regards to the Box Clever Pension Scheme.
“If this was not a case for a financial support direction, it is hard to see what is,” Eversheds partner Giles Orton says. He represents trustees of the Box Clever Pension Scheme. Last week the trustees revealed The Pensions Regulator had issued an FSD to ITV forcing it stump up money to back the Box Clever scheme (PP Online, 26 January ).
The background to the case is complicated. The chain of command leading back to who is ultimately responsible for the scheme is muddied by Box Clever’s complex history as a corporate Frankenstein of media companies.
But the history of the case, and the move by the regulator to publicly issue an FSD – just the fourth time it has done so – on retrospective business transactions sets a number of precedents that could have wider implications.
The story of the Box Clever pension scheme is a tale rooted in the M&A media boom at the turn of the century which led to the eventual formation of ITV, through the merger of Granada and Carlton Communications, in 2004.
It began in 2000 when Thorn and Granada set up a 50:50 joint venture, Box Clever Technology (BCT), and sold their TV hire businesses – Radio Rentals and Granada Rentals – to a company owned by the joint venture, Box Clever Finance (BCF). BCF borrowed £860m from West LB to fund the deal.
BCF took ownership of the 900 rental shop branches and rebranded them as Box Clever. In October 2001, a new defined benefit scheme was set up called the Box Clever Pension Scheme, which transferred active members of the Granada and Thorn DB schemes who had worked in their TV rental businesses.
Yet, though Box Clever was a new joint venture, both Granada and Thorn retained a stake. Two directors were nominated by Granada and two from Thorn to sit on the ten person board. In the course of its investigation, the regulator also received evidence from trustee Nicholas Wakelam.
He claimed board meetings took place at Granada, rather than Box Clever’s new offices and added that both Thorn and Granada were, “very much hands on as shareholders and joint venture partners”, with Granada chief executive Charles Allen occasionally present at meetings.
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