John Menzies PLC, Edinburgh, froze the Menzies Pension Fund effective Friday, and will split the fund into two distinct sections of the company.
In a regulatory announcement Friday, the aviation and distribution firm said its board had taken significant steps to manage the risks of its defined benefit fund. The fund had £369 million ($454 million) in assets as of Dec. 31, said the latest annual report, and a deficit of £71 million, for a funded status of 84%.
Further, the board said it had entered into a memorandum of understanding with the trustee of the fund, setting out a structure to split the DB fund into “two distinct sections within one fund.” One section will be the distribution unit of the firm, Menzies Distribution. The MOU defines “the mitigation required to the remaining section in the event of a corporate structure change of the John Menzies PLC group,” said the announcement. Further details could not be learned.
The announcement comes on the same day the boards of British distribution firm DX Group PLC and John Menzies disclosed they are in discussions regarding the combination of DX and Menzies Distribution, said a separate regulatory announcement.
As part of the deal, it is proposed that about 17% of John Menzies' DB fund would transfer to the combined group. The fund would receive new DX shares equal to up to 5% of the combined group's issued share capital.
Spokesmen could not be reached for comment and details by press time.