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PENSION PRESENTATION - Guinness Peat Group plc

P r e s e n t a t i o n Te a mGUINNESS PEAT GROUP – 14 Nov 2011 IC CONFIDENTIAL – NOT FOR EXTERNAL DISTRIBUTION 3


3 . C r i t e r i a f o r b e i n g a b l e t o i s s u e a F S D“Connected with” or “an associate of” (Insolvency Act definition) – GPG plc: YesTwo part test:“Insufficiently resourced” (statutory test) (or service company)“Reasonableness” (TPR can only issue FSD where reasonable to do so)GUINNESS PEAT GROUP – 14 Nov 2011 ICCONFIDENTIAL – NOT FOR EXTERNAL DISTRIBUTION7


4 . “ C o n n e c t e d w i t h ” / “ a s s o c i a t e o f ”Defined by Insolvency Act 1986 definitionUsual for all wholly owned subsidiaries in a group to be “associated” with parent companyGPG plc satisfies criteria in respect of the sponsoring employers of the Coats and Brunel schemes(and Staveley scheme)GUINNESS PEAT GROUP – 14 Nov 2011 ICCONFIDENTIAL – NOT FOR EXTERNAL DISTRIBUTION8


5 . “ I n s u f f i c i e n t l y r e s o u r c e d ” ( 1 / 2 )Is value of the resources of the sponsoring employers of the Coats/Brunel schemes less than 50% ofthe estimated s75 (buy out) deficit?Work being completed for Brunel – looking like it is “insufficiently resourced” (not formallyconfirmed however)Coats is in the process of being assessedCoats scheme:buy out deficit of c£1.4bn is not correctcalculated by Scheme Actuary as £0.8bn (April 2012). Company advisers estimatecurrent position is broadly unchanged.in any event, “insufficiently resourced” test is against each employer’s share of overall buyout deficit (there are three Coats scheme employers). Therefore not correct to refer towhole buy out deficitGUINNESS PEAT GROUP – 14 Nov 2011 ICCONFIDENTIAL – NOT FOR EXTERNAL DISTRIBUTION9


5 . “ I n s u f f i c i e n t l y r e s o u r c e d ” ( 2 / 2 )Is value of GPG plc's resources more than difference between value of the resources of thesponsoring employers of Coats/Brunel schemes and 50% of each employer’s share of estimated s75(buy out) deficit?Work being completed in respect of Brunel scheme – if Brunel employer is insufficientlyresourced it is anticipated that GPG plc would satisfy this part of the testCoats scheme is in the process of being assessedGUINNESS PEAT GROUP – 14 Nov 2011 ICCONFIDENTIAL – NOT FOR EXTERNAL DISTRIBUTION10


6 . “ R e a s o n a b l e n e s s ”Very limited precedent indicating what “reasonableness” means in FSD contextLehman and BMI (Lufthansa) were insolvency/distress casesEach case highly fact sensitiveTPR required by Pensions Act 2004 to consider all relevant factorsReceipt of financial benefit is relevant to reasonableness – but not the only factorGUINNESS PEAT GROUP – 14 Nov 2011 ICCONFIDENTIAL – NOT FOR EXTERNAL DISTRIBUTION11


7 . “ R e a s o n a b l e n e s s ” a n d G P G p l cGPG plc expects that investment realisation proceeds equivalent to £124m will be required to beretained by the GPG Group for Brunel and Staveley schemesThe transition plan to New Coats will include a thorough review of the appropriate capital structureTo date, GPG plc has been advised that it would not be reasonable for TPR to require GPG plc tosupport the Coats scheme or the Brunel (or Staveley) schemes over and above this £124mIndependent review now being conducted to help assess any potential exposure and advise on GPGplc’s responseGUINNESS PEAT GROUP – 14 Nov 2011 ICCONFIDENTIAL – NOT FOR EXTERNAL DISTRIBUTION12


8 . W h a t h a p p e n s n o w ?GPG plc in regular contact with TPRTPR investigations do not move quickly and to follow the process could take many months if not yearsCapital returns by GPG plc are suspended until we are clearer on TPR’s position and pending theoutcome of the independent reviewIn meantime GPG plc will work constructively with TPR and Coats/Brunel trusteesIf following investigation TPR case team is minded to issue a “Warning Notice”, case will be heard byindependent Determinations Panel and Upper Tribunal where usually affected parties will have right tomake written and verbal submissionsWe have the opportunity to settle at any stageGUINNESS PEAT GROUP – 14 Nov 2011 ICCONFIDENTIAL – NOT FOR EXTERNAL DISTRIBUTION13

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