A senior parliamentarian has raised questions over the deal that saw regional publisher Johnston Press reborn as JPIMedia.
The debt-laden publisher went into administration on Saturday only to be bought out within hours by JPIMedia, a newly incorporated company made up of its previous lenders, in a so-called “pre-pack” deal.
The new owners agreed to wipe out £135m of JP’s £220m debt and inject £35m of fresh capital into the business, but the company’s defined benefit pension scheme, which has estimated liabilities of £109m, did not transfer over.
Instead, the Pension Protection Fund, a ‘lifeboat’ scheme set up by the government to provide pension benefits to members of schemes whose sponsoring employers have become insolvent, will now assess whether it needs to take responsibility for the scheme.
Veteran MP Frank Field, chairman of the backbench Work and Pensions Select Committee, said it was “difficult to understand” how the new owners had been able to acquire the business without taking responsibility for its pension scheme.
He has now written to Lesley Titcomb, chief executive of the Pensions Regulator, to ask about its involvement in discussions with Johnston Press.
Mr Field, pictured, wrote: “In particular, it would be helpful to have an explanation of why it was not possible to find a solution that would have avoided the pension scheme entering the PPF.
“It is difficult to understand why it is possible for JPIMedia to acquire the business, no doubt in the expectation of generating a profit from it, but without taking any responsibility for its pension scheme.
“Might I ask whether, in the light of this and similar cases, you consider that adequate protections are in place to prevent schemes being dumped on the PPF, at cost to pensioners and levy-payers.”
The PFF has itself voiced “concerns” over the rescue deal and has also raised the issue with the regulator.
A spokesperson said: “We have concerns surrounding the circumstances of this pre-pack administration. We will continue to work closely with the Pensions Regulator and the company administrator to ensure the best outcome for the PPF and our levy payers.
“We want to reassure members of the Johnston Press Pension Plan that their benefits are protected by the PPF at what must be an unsettling time for them.”
Shadow culture secretary and deputy Labour leader Tom Watson also raised the pensions issue in an urgent question to his opposite number, culture secretary Jeremy Wright, in the Commons today.
Mr Wright responded: “Anyone in receipt of their pension now will continue to be paid, the changes will affect those who are currently in employment and we believe 250 or so in total.”
Christen Ager-Hanssen, whose 25.06pc shareholding in the old JP was rendered worthless by the decision to take the company into administration, is seeking to form a JP Shareholders and Pensioners Action Group to represent those who lost out as a result of the deal.
Johnston Press/JPIMedia have not so far responded to the issues raised by Mr Field and others today.
Chief executive David King has previously expressed his regret at the impact of the deal on pension scheme members in a letter to staff sent out on Friday night.
He wrote: “Those of you who are members of the defined benefit pension scheme – which is 250 members of the current workforce – will see your future pension payments affected in line with PPF payment rules.
“I am deeply sorry about that, but we have explored in detail all other possibilities. The negative effects on the scheme are an inescapable consequence of taking the steps needed to ensure the future of the business.
“It will be up to the trustees of our pension fund to contact you to tell you what this means.”
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Shareholders wiped out but there must be suppliers who have also been hit by this. No doubt some of them will be small businesses who will be greatly affected by being a creditor of JP. Hoping they can pull through.
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The pension liabilities of the former Johnston Press seem to have risen very dramatically very quickly. Only yesterday, according to the FT, the deficit was ‘more than £40m’. Now, apparently, it is £109m. You also repeat David King’s remark about there being 250 members of the current staff in the defined benefits scheme. The FT article points out that there are in fact 4,959 members of the scheme. Most of these will have spent substantial parts of their lives working for JP and its predecessors. Why doesn’t Mr King mention them? After all, they are the people he and his colleagues have also betrayed.
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The majority of suppliers will be large concerns. Despite touting their ‘Keep it Local” slogan the majority of ‘local’ suppliers, who, despite often offering better price and service, were dumped in favour of deals negotiated at Head Office.
I recall that shortly after the JP takeover of EMAP, exactly identical note books that we used to buy from a local supplier for £1.00 had to be bought from the ‘approved’ supplier for £2.50.
Once JP took over local MD’s made very few decisions, they just shuffled on instructions from Edinburgh and if it was not ‘in the budget’ not a penny extra was spent.
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Tremendous news that Frank Field is involved after all the sterling work he did chasing Sir Phillip Green and bringing him to account during the BHS Pension scandal.
Best, most principled MP in Britain. There are precious few like him and no better man to have on-side.
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Good to have Mr Field involved, but as a JP pensioner in just months I and others in the same position need immediate action, and most urgently information from the trustees. Via internet browses I am led to believe that during the current assessment period for joining the pension lifeboat fund, which can last two years incidentally, payments will be on the fund’s terms and that can mean a reduction of between 10 and 30 per cent. Call me a pessimist, and I can’t argue with that, having worked for JP for 35 years, but I reckon that means I’ve lost 30 per cent of my pension.
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This stinks.
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I don’t think culture secretary Jeremy Wright has all the facts. Yes, existing pensioners, of whatever age, will continue to be paid – but not all of them at the current rate. Those of 65 or who retired on ill-health pensions will continue to get 100% of what they get now. Those who took pensions early, before 65 – and already took a cut of 5% per year to do so – will get 90% of what they get now. But apparently if they took a lump sum as many did at the time of retiring that could also be taken into account. I say “could” because the trustees who are being replaced by a company, haven’t given us that information so we are in the dark about what our actual pensions will be.
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This whole debacle stinks. JP has thrown its past / present employees and shareholders under the bus. Many long term employees past and present have had their hard earned pension reduced by 10%, and their shareholdings, (many bought by salary sacrifice), reduced to nothing. The fact that this is legal is beyond belief.
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