Distributor plans to revive pension plan with whiskey
When the pension fund was found to be $1.3 billion in the red, it seemed time for a stiff drink for Diageo, a British alcohol distributor. Instead the company has plan to use maturing whiskey to plug a deficit. (Undated) Credit: Photos.com
Diageo Plc, the world's largest producer and distributor of alcoholic drinks, is using maturing whiskey to plug a deficit in the company's pension plan.
London-based Diageo said Thursday that it will establish a pension funding partnership with a trustee, generating an estimated $37 million each year for 15 years -- using maturing whiskey spirit as collateral.
At the end of the period, the trustees will be able to sell the spirit back to Diageo for a maximum of an estimated $644 million.
The company is also transferring $75 million directly into the plan, with an additional $220 million held in an escrow account.
The move to use whiskey assets follows a review of the pension fund last year that identified an $1.3 billion deficit.
