Inside the world of business
Demise of pension scheme at Clerys
CLERYS WORKERS will take to the streets next Tuesday to protest over the demise of their pension scheme following the recent takeover of the retailer by US private equity group Gordon Brothers.
Members of Siptu and Mandate will protest outside the O’Connell Street store to “highlight their disgust” at the manner in which staff have been treated by the recent receivership of Clerys and its sale to Gordon Brothers.
The unions have accused the company of failing to “respond to our concerns and to meet their moral obligations” to workers.
Pension contributions are deferred wages and the workers are right to highlight their plight, having paid into the scheme over a number of years in the expectation of receiving funds that would tide them over in old age.
However, the cold reality is that Gordon Brothers was never going to accept responsibility for a fund with a deficit thought to be more than €30 million.
Why would it?
The reality is that the Clerys deal was a pre-packaged receivership that was many weeks in the making.
Gordon Brothers had a good look under the hood of Clerys before deciding which parts it wanted to cherry pick in a carefully constructed deal with Bank of Ireland over the company’s €26 million debts.
It was then just a matter of pressing the button on the receivership of Clerys, its sale to the US group within hours of that and the closure of three stores.
The deal saved about 350 jobs in the Clery’s store, of which about 147 are directly employed by the retailer. For now at least, Clerys chief executive PJ Timmons remains with the business under its new owners. Perhaps, given his pivotal role in the demise of the business, he might like to address the workers on Tuesday and explain why their pensions have gone up in smoke.
Deal done in Spain but what will we gain?
THE BILL has finally arrived for the Spanish banks. Two questions will be answered in the coming days. Is it correct? And can Spain afford to pay it without a full-blown bailout?
The answers to these questions are of great importance to Ireland because, despite the machinations of the past few months, the deal done for Spain will be the template for any measures aimed at cutting the Irish debt burden,
But what is arguably more important is that they are answered quickly, because the Government has rather foolishly, but understandably, created an expectation of some sort of imminent breakthrough. And it is an open question as to how much of the support for Irish bonds that has been in evidence of late will wane if events do not proceed apace.
The first indications of how long things may take to resolve themselves will come on Monday when the market passes judgment on the stress tests and also Moody’s review of Spain’s creditworthiness.
The €59.3 billion capital shortfall in the Spanish banks identified by Oliver Wyman was being described as an attempt to hit a “Goldilocks figure” yesterday, meaning that it was not too big to scare off the markets but no so low as to seem unrealistic.
That may seem a bit optimistic given the Irish experience but should it prove a well-founded assessment, then the hope must be that Spain can move quickly to address the question of how it will tap the European Stability Fund. Then the fun starts as the spanner thrown in the works by Germany and its AAA peers this week will have to be dealt with. Clarity on the Irish situation this side of Christmas looks optimistic.
Glanbia's loss is DAA's gain
THE NEWS that Glanbia’s man in America has landed the top job at the Dublin Airport Authority not only means a pay cut for the Navan native, it also throws up questions for Glanbia.
The food company is about to enter one of the most decisive periods in its history. In the next few months, members of Glanbia co-op will vote on whether to enter a joint venture with Glanbia plc to run Glanbia’s milk business and whether to sell down their holding in the plc to finance it.
The transaction will mark the listed company’s first move away from full control of its milk processing business in Ireland, and will allow it to increase its focus on its US and global nutritionals business, the main driver of growth for the company over the last few years.
As the head of Glanbia’s operations in the US, Kevin Toland has been critical to that transformation. His departure at this juncture is therefore unfortunate.
While Glanbia’s share price has been unshaken by the announcement that he is leaving, which was made by the company to the stock exchange, it has raised some eyebrows in the stockbroking community.
If all elements of the deal are passed in full, Glanbia will be shaping up for a significant share placing, probably by the end of the year. Mr Toland is scheduled to remain with the company until the beginning of next year.
While the departure of Mr Toland is not the end of the world for the company – he oversees four separate businesses that are all managed by executives who are well-known and well-regarded in the industry – Glanbia will nonetheless need to assure investors that its succession plans are up to scratch.
As the complex machinations of Glanbia’s joint venture deal plays out in the next few months, searching for a successor to Mr Toland is something Glanbia could do without.
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