Trustees to meet Pensions Authority over INM plan to wind up scheme
Media group believed to have made financial offer in pursuit of swift agreement
Protesters outside the INM emergency general meeting held last week in Dublin. Photograph: Eric Luke
The trustees of Independent News and Media’s defined benefit pension schemes will meet the Pensions Authority on Tuesday to discuss issues arising from the company’s controversial decision to cease payments to the plans.
Under INM’s wind-up plan, cuts of between 30 and 80 per cent would be implemented on pensions that were already cut by 40 per cent in 2013.
The meeting with the Pensions Authority follows the intervention last week of Minister for Social Protection Leo Varadkar, who asked Attorney General Máire Whelan if it was possible to intervene in a forthcoming High Court case in connection with INM’s proposed capital reduction.
He said the Pensions Authority had invited the trustees of the two defined benefit schemes for discussions to “give them advice and support”.
Trustees of the two schemes, whose members are almost all deferred pensioners and former employees of INM, have asked the company to contribute €12 million to replacement defined contribution schemes to help plug the gap in their pension promise. This is about half the expected once-off windfall benefit to INM’s balance sheet following the closing of the schemes.
INM is believed to have made a financial offer to the trustees at a meeting last Friday that fell short of the €12 million being sought.
INM is due to hold a board meeting on Thursday and is believed to be pushing for an agreement by then. However, trustees are unlikely to meet this deadline.
In a statement issued late on Monday, INM said that it was “never” its intention to “renege on the [restructuring] agreement with the pension trustees in 2013”.
“INM has and will continue to make a significant pension funding contribution of €11.1 million per annum from 2013 to 2023,” it said.
However, this does not deal with the shortfalls that will result from the scheme now being wound up, following the company’s decision to cease making payments.
It is understood that the trustees have received legal advice that INM is in breach of a contract it signed in 2013 with the Pensions Authority, which would have plugged the deficits in the schemes over time.
The trustees want a watertight commitment from INM to continue making the special contributions that were agreed under the 2013 contract. At present, these payments are not guaranteed and depend on INM’s financial position.
In its statement, INM insisted it currently has “no plans” to pay dividends and any suggestion that “there is a windfall for shareholders” arising from its proposed capital restructuring was “wrong”.
“The capital restructure creates a nil reserve balance in INM and any dividends will have to be paid from future generated profits,” the company said.
INM is currently profitable, reporting interim profits of €18.5 million for the six months to the end of June.
The company confirmed, however, that its dividend policy will be reviewed by the board and at its next annual general meeting, which will probably take place early in the summer.
While INM has not made any direct reference to paying dividends, analysts, including its house broker, Davy, have identified the capital restructuring as a way to strengthen its balance sheet to pave the way for the possible resumption of dividends in the near future.
When the proposed share restructuring was first announced last month, Davy said: “INM will no longer be restricted from paying a dividend. With a free cash flow yield of 16 per cent, a progressive dividend policy could provide investors with an attractive dividend yield if implemented.”