Pension trustees warn Morrisons bidders of risk to retirement pots
Private equity firms circling Morrisons have been warned buyouts would hinder its ability to support staff retirements by pension trustees.
Trustees of pension assets worth £5.5bn said the proposed buyout would undermine the covenant protecting the retirement funds of members.
Both Clayton, Dubilier & Rice and Fortress should offer improved financial security to scheme members before any deal proceeds, trustees urged.
Steve Southern, the chairman of trustees, said: “An offer for Morrisons structured along the lines of the current offers would, if successful, materially weaken the existing sponsor covenant supporting the pension schemes, unless appropriate additional support for the schemes is provided.
“We hope agreement can be reached as soon as possible on an additional security package that provides protection for members’ benefits.”
Both firms would borrow heavily against the supermarket to fund an acquisition, causing trustees to fear this would result in less cash into retirement pots.
Trustees said that they were £800m short of the assets needed to secure members benefits with an insurance company, The Telegraph reported.
Clayton, Dubilier & Rice said it did not “intend to make any changes” to the pension schemes and employer contributions would “continue in line with current arrangements.”
The private equity firm said it would provide pensioners with “appropriate support” and welcomed “further positive engagement” on the issue.