The proposal, which will need approval from shareholders and the pensions regulator, would be implemented alongside a re-leveraging of the company to fund a partial share buyback from the pension fund, said the firm.
“The company’s proposals involve an effective transfer of 90% of the equity in the company to the Trustee in exchange for the pension scheme giving up its claim on the Company.”
This would free Uniq from the “enormous burden of the pension deficit, would normalise the capital structure and allow the management to deliver their plans to create value going forward for all shareholders”, it added.
The plan was announced as the desserts, sandwiches and salads manufacturer posted a 9.9% rise in group sales in the third quarter driven by a 13.5% increase in food-to-go sales and a 6.1% rise in sales of desserts.
Desserts: price increases
However, the recent implementation of price increases in its desserts business to reflect hikes in dairy prices haddented sales in the short-term and taken longer to complete than originally planned, said chief executive Geoff Eaton (pictured above).
“The performance of the desserts business in the third quarter has been negatively impacted by the implementation of the price increase and this short-term disruption may continue into the fourth quarter.”
Investec Securities added: "Price increases took four to six weeks longer to secure versus management's expectations, and this will hit full year 2010 estimated profits [before interest and tax] by around £0.5m. Whilst there has been no major loss of volume as a result of the increases, sales of own-label desserts have slowed a little in recent weeks.
"It is not clear whether this is just temporary indigestion or a more permanent impact."
As for the proposed changes to the pension scheme, it added: "It is encouraging to see some progress being made in the resolution of the legacy pension, although initial ballpark calculations do not suggest major upside on the current valuation. However, it could free Uniq from an open ended commitment and allow the management to concentrate on building on the current improved
momentum in the business."