ITV has hedged additional liabilities in its defined benefit pension scheme through a 'longevity swap' with investment bank Credit Suisse. In the process, it has bolstered its balance sheet and made the group a better acquisition target.
Under the swap, ITV will pay the bank a fixed, though unspecified, sum and Credit Suisse will guarantee to cover any increase in liabilities if the pension scheme's 12,000 members live longer than expected.
The deal adds £50m to the pension fund's £312m deficit, roughly equivalent to an extra year of longevity, and cancels the benefit that ITV got by extending an arrangement that sees revenues from a subsidiary paid into the scheme.
What we said: Buy
When: 22 January 2010
Price then: 58p
Price now: 56p
Change: -3%