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Diageo uses whisky to plug pension deficit

Published:Wednesday | July 7, 2010 | 12:00 AM

Diageo PLC, the world's largest producer and distributor of alcoholic drinks, is using maturing whisky to plug a deficit in the company's pension plan.

London-based Diageo said last Thursday that it will establish a pension funding partnership with a trustee, generating some £25 million (US$37 million) each year for 15 years - using maturing whisky 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 £430 million.

The company is also transferring £50 million directly into the plan, with an additional £147 million held in an escrow account.

The move to use whisky assets follows a review of the pension fund last year that identified an £862 million deficit.

- AP