Dairy Crest, a UK-owned dairy foods company has announced that it is to plug its pensions gap by pledging £60m worth of its maturing cheese to pension fund trustees.

As part of a reorganisation of its capital structure and an agreement to provide additional funding to the Dairy Crest Group Pension Fund, the company stated that the latest decision to use £60m worth of cheese will improve the pension fund’s position in the event of an insolvency. Total inventories of maturing cheese as of 31 March 2013 are estimated at £150m

As at November 2012, deficits on an IAS19 basis were £83.8m. Dairy Crest will also make an immediate one-off payment into the pension fund of £40m in addition to on-going annual deficit contributions of £20m which are paid monthly.

In June last year, Dairy Crest sold its French margarine business St Hubert for £344m to pay off debts within the company.

Dairy Crest chief executive Mark Allen said: “Following the successful sale of St Hubert, we have now restructured our balance sheet, putting in place a more appropriate capital structure. This will reduce costs going forward and underpin the dividend and still gives us scope to invest to grow the business.

“We are also pleased to have reached agreement with the Trustee of the Pension Fund to improve its financial position at an acceptable cash cost to the company.”

Share Story: