British alcoholic beverage company Diageo, London, provided a £1 billion ($1.2 billion) credit facility to two of its pension funds amid the U.K. liquidity crisis last year.
The company disclosed the interim payment, which was made in October, in its interim results update published Thursday.
The £1 billion was split into two separate agreements, with £850 million for the Diageo Pension Scheme and £150 million for the Diageo Lifestyle Plan. The provision was made "to support temporary liquidity challenges until 29 December 2022," the update said.
The update added that, as of Dec. 31, "the outstanding balance due from the scheme under the credit facility" was zero.
Further information on the credit facility could not immediately be learned. Spokesmen did not immediately respond to a request for comment.
As of March 31, the Diageo Pension Scheme had £6.8 billion in assets and a £752 million deficit. The Diageo Lifestyle Plan had £433 million in assets and a £14 million deficit as of Jan. 1, 2021 — the most recently available information on the pension fund website.
A Sept. 23 announcement by the U.K. government of unfunded tax cuts — proposals that were later rescinded — triggered soaring gilt yields and plummeting prices. Some pension funds with leveraged liability-driven investment programs, used to hedge liabilities, faced huge and multiple collateral calls to keep their hedges in place. The situation led to some pension funds racing to find the cash to post as collateral, while others were forced to sell liquid assets in order to meet collateral demands.
