28th May 2008 07:00
Raven Mount plc ("Raven Mount" or the "Company")
Buyout of the Swan Hill Pension Scheme by Pension Insurance Corporation
Raven Mount plc ("the Company") announces that the Directors of the Trustee of the Swan Hill Pension Scheme ('the Scheme'), with the support of the Company, have entered into an agreement with Pension Insurance Corporation Limited ('PIC') for a full insurance buy-out of the Scheme. In order to facilitate the buy-out the Company has agreed to pay an additional £7.25 million to the Scheme, £2 million of which is payable immediately and £5.25 million plus interest is payable in January 2009. Further adjustments may be required following a data and benefit verification process which is expected to take up to 4 months. In addition, the Company will have to pay costs and fees on the transaction and further costs in the course of winding up the Scheme; a process which is currently expected to take a year. Following the verification process, completion of the buyout and the winding up of the Scheme, Scheme members' benefits will be insured within a secure FSA regulatory environment and the Company will have no further exposure to the pension liabilities of the Scheme.
The Scheme is the defined benefit pension fund of Swan Hill Group plc, which was acquired by Raven Mount in December 2003. Since the takeover the Company has made concerted efforts to address the various funding, regulatory, legal and accounting issues involved for a company which operates a defined benefit pension scheme. These concerted efforts, including the closure of the Scheme to future accrual for existing employees on 31 December 2005, have been more than offset by the increasingly restrictive regulatory environment within which the Scheme operates, the changes in accounting standards leading to increased volatility in reported earnings, the difficulty in identifying and reporting on a fair value measure for the reported liabilities of the Scheme to shareholders, the increasing restructuring restrictions placed on companies which operate such schemes and, in particular, increasing concerns about longevity trends and their impact on the Scheme liabilities over the long term. The Company has been monitoring developments in the buy-out market for some time and believes that the market is sufficiently developed and the economic conditions relevant to pension fund buy-outs sufficiently beneficial for it to have obtained a competitive price for the transaction.
The Company has made contributions of £10.6 million into the Scheme since the takeover in December 2003 of which £1.8 million was paid in the first quarter of this year. Including the £7.25 million noted above, the total contributions made or to be made since December 2003 will exceed £17.85 million, plus transaction and wind-up costs. Under International Accounting Standard 19, the Scheme had a 'surplus' of £5 million on a pre-tax basis as at 31 December 2007.
Further details of the transaction and the results of any data verification that may be available at the time will be reported in the Interim Accounts.
Bim Sandhu, CEO of Raven Mount plc, commented:
"The Company is very pleased to have reached an agreement with the Directors of the Trustee of the Swan Hill Pension Scheme and Pension Insurance Corporation which removes the ongoing economic exposure to the Company of the Scheme liabilities and at the same time provides a more secure insurance backed safeguard for the benefits of Scheme members. We believe that this is an appropriate time to transfer the risks of the Scheme to an FSA authorised and regulated company such as Pension Insurance Corporation, which is more suited to managing the associated risks. Whilst the transaction in the short term comes at a significant financial cost to the Company we believe it brings considerable benefits which more than offset the cost being paid.
I should like to thank the Company's professional advisers, PricewaterhouseCoopers and Berwin Leighton Paisner LLP, as well as my fellow Directors of the Trustee of the Swan Hill Pension Scheme, in particular the Independent Directors, and their advisers (Watson Wyatt and CMS Cameron McKenna) for the manner with which we have been able to reach a conclusion with the management of Pension Insurance Corporation on such a complicated and fundamental matter. We look forward to working with Pension Insurance Corporation, whom I should also like to thank for their professionalism and the speed with which they have been able to transact once they became the chosen party, to ensure that the transition of their first insurance backed pension buy-out transaction is well managed."
Sir Mark Weinberg, Chairman of Pension Corporation, commented:
"As Chairman of the Board of Pension Corporation, I am delighted that Raven Mount has chosen Pension Insurance Corporation to secure the pension benefits of members of the Swan Hill pension fund. We have already worked successfully with Raven Mount and the Swan Hill trustees to identify a solution that best meets their needs and we look forward to building on this collaboration to ensure a seamless transfer and smooth administration and transfer for the Swan Hill fund's members."
Sir Brian Hill, on behalf of the Independent Directors of the Trustee of the Swan Hill Pension Scheme, commented:
"We would like, on behalf of all members, to express our appreciation to the directors of The Raven Group for the support that they have given to the scheme since the take-over of Swan Hill some five years ago. We have seen at first hand the time, the effort and resource that they have given without hesitation to keep the Scheme efficiently run and properly funded. The decision now taken meets the interests of all parties - the Scheme, all its members and the Company. It is a significant achievement".
Contacts:
Raven Mount plc 020 7235 0422
Bim Sandhu/Mark Kirkland
Shore Capital and Corporate Limited 020 7408 4090
Guy Peters/Pascal Keane
Notes for Editors:
Raven Mount is an AIM quoted company whose principal areas of operation are property fund management, property development and the development and operation of Independent Living facilities.
Raven Mount was founded in November 2003 by Anton Bilton (Executive Chairman), Bim Sandhu (Chief Executive) and Glyn Hirsch (Executive Deputy Chairman) and took control of Swan Hill Group PLC, the housebuilder, in December 2003 in a hostile takeover supported by Swan Hill's four largest shareholders.
In December 2004, shareholders approved the reversal of Anton Bilton and Bim Sandhu's private residential development group, Raven Property Holdings plc, for a total consideration of up to £39.9 million payable in Raven Mount shares and began a strategic reinvention of the business.
In July 2005, Raven Mount subscribed £10 million towards the £153 million flotation of Raven Russia Limited ('Raven Russia') on AIM. Raven Russia was formed at Raven Mount's instigation as a vehicle for institutional shareholders to invest in the Russian property market with an initial focus on the Warehouse property market in the Moscow and St Petersburg regions. Raven Mount's wholly owned subsidiary, Raven Russia Property Management Limited, acts as the property adviser to Raven Russia. In April 2006, Raven Russia raised a further £310 million through the placing of 270 million shares at £1.15 per share.
Raven Mount is actively involved in the development and management of Independent Living facilities for the elderly through its Audley brand in which it has a 75% interest with the remaining 25% being owned by the management team.
Audley has commenced development on four separate schemes, representing a total of 408 individual units, at St. Elphins (Matlock, 127 units), Mote House (Maidstone, 87 units), Inglewood (Berkshire, 96 units), and Ilkley (Yorkshire, 98 units). Audley owns and manages existing facilities at Willicombe Park (Tunbridge Wells, 67 units), Flete House (Devon, 30 units) and manages Hollins Hall (Harrogate, 71 units), totalling 168 units under management.
In addition, Raven Mount continues to investigate suitable resort/second home opportunities, both in the UK and internationally. Raven Mount has outline planning consent, in a joint venture with John Hitchcox and Yoo Limited, comprising second homes in 650 acres at Coln in the Cotswolds, of which it currently has detailed consent for 83 units.
www.theravengroup.co.uk
www.audleylife.co.uk
www.thelakesbyyoo.com
www.ravenrussia.com
Pension Corporation
The Pension Corporation group provides the following solutions to defined benefit pension funds:
Insurance Buy-out
Longevity Insurance
Pension Fund Sponsorship
Asset Liability Management
These solutions enable pension funds to protect their members' benefits by strengthening and stabilising their financial position, and enable their employers/sponsors to protect themselves against volatility of their earnings and balance sheet values.
Pension Corporation is backed by large blue chip financial services companies, including The Royal Bank of Scotland, HBOS and Swiss Re. Its Board and management include a number of expert and highly experienced insurance industry executives, including Sir Mark Weinberg, co-founder of St James's Place Wealth Management Group, John Coomber, former Chief Executive of Swiss Re, Sir Martin Jacomb, former Chairman of the Prudential Assurance Group, and Bob Scott, former Group Chief Executive of Aviva. Its shareholders have committed nearly £1 billion of equity, giving it the capacity to take on up to £25 billion of liabilities. The total of pension funds sponsored to date by companies under the Pension Corporation umbrella amounts to £4.3 billion.
www.pensioncorporation.com
Related Shares:
RAV.L