The company destroyed by its pension scheme
Dawson's shares plunged by 46% to 0.62p on the news, valuing it at just £1.4m. Ten years ago, the shares were trading at 30p. Worse still, in early 2001, the company turned down an 85p per share cash offer from Guinness Peat Group.
There are numerous FTSE 100 stocks with big pension issues, most notably BT Group, BAE Systems, Royal Bank of Scotland and Marks & Spencer.
Like Dawson, due to the history of their operations, all these companies have schemes where the number of pensioners is very large compared to the current workforce.
Dawson's pension deficit, measured at £50m last year, dwarfs its market value. Although none of these blue chips are in the same dire position, it is reckoned that their pension deficit is larger than the value of their equity right now. That's a classic warning sign.
Hopefully, a satisfactory solution for all involved can be found for the Dawson situation, although the omens do not look good right now. Uniq was a business in a similar predicament last year, and it managed to pull off a miraculous escape. For us as investors, it's a salutary lesson about investing in older, more established businesses, to make sure you fully understand the situation with regards to its pension scheme.
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