GKN eyes £250m of debt to fund DB deficit
GKN Group is considering issuing corporate bonds to plug the gap in its defined benefit (DB) schemes, according to reports.
The Sunday Times said this was in response to the engineering firm seeing a 30% surge in the deficit of its DB schemes globally over 2016.
The paper said the company is hoping the bonds will raise £250m, although it is believed to be concerned about funding the schemes too highly.
GKN declined to comment.
The move would follow the company agreeing a £190m buyout deal with Pension Insurance Corporation (PIC) for one of its schemes in early January.
As of 31 December 2016, the group's schemes had a deficit of £1.2bn on the IAS 19 accounting measure, up from £912m at the end of 2015. It had unfunded liabilities of £17m and funded liabilities of £3.5bn, while assets sat at £2.3bn.
The two funded schemes are undergoing triennial valuations as of 5 April 2016 and 31 December 2016 respectively.
However, when including the group's schemes abroad, the aggregate deficit figure stood at £2bn, up from £1.6bn at the end of 2015.
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