UK private-label food group Uniq today (20 October) unveiled its latest plan to solve a pension deficit that dwarfs the value of the business.

Uniq, which makes sandwiches and desserts for UK retailers, had its first idea to deal with its GBP436m (US$496.1m) deficit rejected by the country’s regulator in July.

This morning, Uniq laid out plans for the trustees of the pension fund to take 90% of the equity of the food manufacturer in a “deficit for equity swap”.

The trustees would take on the stake in exchange for giving up its claim on Uniq. The food firm would also offer the trustees a put option to sell back a portion of its stake for GBP25-30m, funded by the company’s recent disposals in Europe.

Uniq said it and the trustees and “worked together to find an appropriate solution” to the deficit, which the company described as “disproportionate in scale” to its underlying business.

Both sides have agreed in principle on the plan, although “final details” have yet to be agreed, Uniq said. The UK’s Pensions Regulator will then consider the plan when it is formally submitted.

Uniq, which according to the London stock exchange has a market cap of just over GBP8m, saw its shares rise 7.1% to 7.5p at 10:15 BST this morning.

The company also reported its third-quarter sales, which rose 9.9% on the year thanks to “new business wins” at the end of 2009 and product launches this year. Uniq said operating profit was “slightly ahead of last year”.

Chief executive Geoff Eaton said: “The improving performance of our businesses and the proposed final resolution of the legacy pension deficit through the deficit for equity swap will allow us to focus on creating value for the benefit of all our stakeholders including the Pension Scheme as the majority shareholder.”