Booze backs up this pension plan
Diageo, the maker of Johnnie Walker whiskey, will put millions of barrels of scotch into a trust to ensure pension assets will be in place if the company defaults.
Here's a nifty way to make sure a company has enough assets to cover its pension obligations.
Diageo (DGEAF), the maker of Johnnie Walker whiskey, has put away 2 million barrels of maturing whiskey from its distilleries in Scotland.
Diageo said Thursday it would transfer ownership of £430 million, or $645 million, worth of whiskey to a pension funding partnership.
Diageo employees would receive their pensions in cash, not whiskey, but the move does give them a guarantee that they would not walk away empty-handed if the company were to default.
Diageo was little changed in London today at 1,039 pence.
"A pension funding partnership will be formed, which will hold maturing whiskey spirit as assets," Diageo, which also makes Guinness stout and Smirnoff vodka, said in a statement.
As part of the deal, Diageo agreed to pay the pension partnership £25 million a year ($37.9 million) as it sells the recently distilled whiskey once it matures after three years and replaces it with new stock. The agreement would expire after 15 years, at which point Diageo would buy back the whiskey, which comes from distilleries such as Oban on the west coast of Scotland.
Companies are searching for new ways to reduce their pension deficits, which increase as people live longer, The New York Times noted. The British supermarket chain J Sainsbury (JSAIY) said earlier this year it would transfer property into a pension vehicle, while Whitbread (WTBCF) agreed to hand over a share in its portfolio of restaurants and hotels.
The investment firm Man Group moved some hedge-fund assets into a trust as a security for its British pension plan in March.
All of this suggests that it might be a good idea for, say, Constellation Brands (STZ) to put its maturing inventories of Robert Mondavi wines or Black Velvet Canadian whiskey into a trust. Or for Brown-Forman (BF.B) with its inventories of Jack Daniel's whiskey.
And we wonder if McDonald's (MCD) will park millions of cartons of frozen french fries to back its pension obligations, or if General Motors will back its pension plan going forward with inventories of Corvettes.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The Nasdaq Composite (+0.5%) and S&P 500 (+0.2%) posted modest gains on Thursday, but not before enduring a morning dip into the red, which took place in reaction to reports indicating Russia has commenced military exercises on the Ukrainian border.
The news from Europe knocked the key indices from their early highs, while giving a boost to safe-haven assets like gold futures (+0.5% to $1290.80/ozt), Treasuries (10-yr yield -1 bps to 2.69%), and the Japanese yen (102.30 ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
VIDEO ON MSN MONEY
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'