ICG seeking court approval for €46m reduction in share premium account
IRISH Continental Group (ICG), owner of Irish Ferries, is seeking court approval for a €46m reduction in its share premium account for purposes including paying a dividend to shareholders.
ICG company secretary Thomas Corcoran said in a sworn statement he believed the proposed reduction was in the interests of shareholders and did not believe it was prejudicial to creditors or the solvency of the company was in any way affected.
After the reduction, there would be €6.3m standing to the credit of the share premium account, he said.
When Mr Justice Peter Kelly said that sum left "little margin for error", Paul Sreenan SC, for the company, said it was still in a very strong net asset position.
When transferring the application to the Commercial Court for hearing next month, the judge was told of some €25.5m deficit in the pension fund of Irish Ferries Ltd, one of the companies in the ICG.
He was also told of a deficit since 2003 in the Merchant Navy Officer Pension Fund (MNOPF), a multi-employer defined benefit pension scheme in which ICG and about 400 other employers participate.
Under the rules of that fund, all employers are liable for the deficit and the trustees of that fund have put in place a recovery plan under which all employers will contribute proportionately through deficit payments aimed at eliminating the deficit by 2022.
ICG has a retirement benefit obligation of €3.8m representing the net present value of the deficit payments yet to be paid between 2012 and 2020. If other participating employers default in their obligations, ICG will have to pay a larger share of the scheme deficit.
ICG said it has guaranteed the liabilities of some of its subsidiaries, including Irish Ferries Ltd which had a net asset position of €35.03m in December 2011 after providing for retirement benefit obligations of €32.5m.
The retirement benefit obligations comrpise almost €7m in agreed deficit payments to the MNOPF over the period 2012 to 2020 plus €25.5m comprising the excess of liabilities over assets in the Irish Ferries Ltd Pension Scheme.
It said Irish Ferries is making annual deficit payments of €2.8m a year to the trustees of that scheme pending agreement of a funding proposal under the Social Welfare and Pensions Act 2012. ICG had also provided letters of financial support for some of its other subsidiaries.
ICG says the proposed capital reduction will not affect existing employment rights, including pension rights, of any employees of the company. ICG has 14 employees while there are some 39 employees in companies across the group.
The judge transferred the proceedings to the Commercial Court and returned the application for hearing on July 17. Noting the position relating to the pension funds, he said the fund trustees had an opportunity to apply to the court if they so wished.