UK – Retailer Marks & Spencer has revealed information provided by its pension trustee about investment policy amid the ongoing takeover battle for the company.
“Marks and Spencer Group plc has asked the Trustees of the Marks & Spencer Pension Scheme about the possible impact on the pension fund of a deterioration in the creditworthiness of the employer group,” the firm said in a statement.
“The trustees have today responded by providing information in relation to the possible implications of such a deterioration on the investment policy of the fund.”
The company, which is facing a multi billion-pound takeover proposal from tycoon Philip Green, added that the Trustees have stated that they would be “concerned” about any “material weakening of the Company's covenant”.
It quoted the trustees, chaired by former M&S director David Norgrove, as saying that they would have to consider adopting a more conservative investment strategy – “involving a significant shift into bonds”.
Such a shift, according to the company, would be more expensive than the current investment strategy, of 40% bonds and 60% equities.
The company said that a shift to 80-20 bonds-equities would cost up to 490 million pounds, against the current 105 million-pound cost. A shift to 100% gilts would see costs rise to 785 million pounds, it added.
M&S said: “Our commitment to retaining a strong balance sheet, which is supported by the strong unencumbered property portfolio, together with an investment grade credit rating gives us confidence that no material change should be required to the rate of contribution to the UK defined benefit pension scheme.”
M&S last week said that its pension trustees must decide for themselves how to respond to tycoon Philip Green’s request for information on pension funding that forms part of his takeover proposal.