Diageo promises to plug pension deficit with whisky
Diageo, the world's biggest maker of alcoholic drinks, said on Thursday that it will transfer more than two million barrels of whisky into its UK pension fund to help plug an 862-million-pound deficit.
Diageo revealed in a statement that it has reached agreement with pension fund trustees over a 10-year plan to address the deficit, which is equivalent to 1.05 billion euros or 1.3 billion dollars.
The group will pay 197 million pounds into the pension scheme, and set up an innovative partnership to hold 2.0-2.5 million barrels of maturing whisky.
"A pension funding partnership (PFP) will be formed, which will hold maturing whisky spirit as assets," Diageo said in an official statement.
"This structure will generate an income to the UK Scheme which is expected to total 25 million pounds each year over the term of the PFP."
The pension fund will sell its share of the partnership back to the group after 15 years, for an amount equal to the remaining deficit, up to a maximum of 430 million pounds.
Diageo, the world's largest whisky producer, will use some of the highly valuable barrels of whisky it has maturing in warehouses across Scotland.
The liquid stock held by the pension scheme will come from Diageo's malt and grain distilleries in Scotland and represents around 30 percent of its total whisky stock.
Diageo's whisky brands include Johnnie Walker and Talisker, while it also produces Guinness, Baileys liquor and Smirnoff vodka.
- Dow Jones Newswires contributed to this report -
© 2010 AFP