A business writer has backed last week’s rescue deal for Johnston Press as the “best outcome” for the company’s pensioners, even though some are likely to lose out as a result of the move.
The company was reborn as JPIMedia in a so-called “pre-pack” deal after a brief period in administration, but its defined benefit pension scheme is now set to be taken over by the government-sponsored Pension Protection fund.
This is likely to mean members of the scheme who have not yet reached retirement age will receive lower benefits than would otherwise have been the case.
But Margaret Taylor, left, business correspondent for the Herald whose main rival is the JPIMedia owned Scotsman, believes it is still the best outcome for the estimated 5,000 pension scheme members.
In a column published on Saturday, she argued that by paving the way for the scheme to enter the PPF, the administrators have actually secured the pensioners’ interests.
Wrote Margaret: “Though it had put itself up for sale in the hope of finding a buyer that could wipe out that debt, the fact its pension scheme had a multi-million-pound deficit meant doing so was always going to be a tall order: paying off bondholders in exchange for a viable business is one thing, taking on a large and unstable multi-year liability as part of that is another thing entirely.
“Viewed like that, the pre-pack, which allowed the bondholders to take over a virtually debt-free business that would almost certainly have failed otherwise, was the best possible outcome not just for Johnston Press’s 2,000 employees but for its near-5,000 pension scheme members too.”
As reported last week, the administrators are likely to face a claim of up to £305m from the PPF, a figure which it calculates to be the cost of continuing to secure the benefits of JP’s pension scheme members at their current level.
Given the company’s previous level of debt, however, the claim is unlikely to succeed, although the Pensions Regulator could order the new owners, JPI, to make a contribution to the fund.
Margaret also criticised Norwegian investor Christen Ager-Hanssen for srtting up a Pensioner and Shareholder Action Group in protest at the pre-pack deal.
She wrote: “Given that the interests of shareholders, who exist to take money out of a business, are diametrically opposed to those of pension scheme members, this makes no sense.
“It makes even less sense when it is considered that the administration has actually secured members’ interests by paving the way for the pension to enter the Pension Protection Fund.”