Administration February 3, 2004

Marks & Spencer to Cover Pension Deficit with £400M Bond Offering

March 2, 2004 (PLANSPONSOR.com) -Marks & Spencer, the ailing British food and clothing retailer, is following General Motors' example and putting a £400-million bond issue in the markets to close its pension deficit.

Reported by

Fred Schneyer

Marks & Spencer officials say the added capital will raise the plan’s funded status from 82% to 94%, according to news reports. An actuarial valuation identified a £585-million shortfall.

“By taking this action, we are providing reassurance to the scheme members,” Finance Director Alison Reed announced in a statement. “This is an opportune time to raise the funds, taking into account current interest rates and demand in the corporate bond markets.”

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Pension-fund deficits at members of the benchmark FTSE 100 Index peaked at about £45 billion last year before stock markets started to recover.

GM used the proceeds of a 2003 $13.5 billion bond sale to help defray its pension costs. (See GM Driving Debt Proceeds To Pension Liabilities ).