Sep 14, 2021
CD&R wins over Morrisons pension trustees with property pledge
Clayton, Dubilier and Rice has agreed to provide extra support to Wm Morrison's pension funds if it takes over the UK supermarket group, after trustees warned that a debt-fuelled buyout would "Materially weaken" its retirement schemes. The New York-based group, one of two US private equity firms vying to buy the grocer with a £9.7bn offer, said it would commit extra Morrisons properties to the pension funds as security, giving them a legal claim over the real estate in the event of an insolvency. The trustees would "[continue] to work with CD&R and Morrisons in the future to ensure scheme benefits remain protected" if the deal went through, they said in a statement. The trustees are aiming for the schemes to reach a funding level that would enable an insurer to buy them out, or take over the payment of pension promises, which would eliminate financial reliance on the company. "It's all very well for CD&R to pledge more properties to Morrisons' two pension schemes in practice, their value is questionable if Morrisons went bust and the trustees had to sell them in the open market," said Ralfe, a former pensions adviser to the supermarket group.
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