The Times reports that bidders for Northcliffe and pension specialists claim that if DMGT had sold the business, it would have incurred significant pension contribution costs believed to be as much as £300m. Moreover, around £100m of those costs were unanticipated by the City.
Payments of around £200m were foreseen due to the obligation to strengthen Northcliffe's pension scheme, but DMGT would have also needed to pay perhaps over £100m into its group pension scheme.
The Times claims that the trustees of DMGT's scheme could have demanded the payment from the company because, without Northcliffe, the size of the business supporting the scheme would have been smaller.
The payments would have dampened the return DMGT would have made from Northcliffe, for which it had initially hoped would be around £1.5bn.
Brand Republic attempted to contact DMGT's finance director Peter Williams for a response, but ironically he was in a pension meeting.
With DGMT chairman Viscount Rothermere believed to have wanted at least £1.3bn, DMGT called off the sale claiming that bids had been lower than the long-term value it could get from Northcliffe.
If Northcliffe had gone for £1.3bn, then DMGT's retained profit would have been much less than £1bn due to the pensions payments, DMGT's planned debt repayments and distributions to shareholders.
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