The background

​The sponsoring employer manufactures diagnostic machinery in the healthcare sector, and is owned by a German parent.​
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The Trustees had not previously taken independent covenant advice. They initially appointed us to assist in the design of a proportionate covenant monitoring framework to help them in regularly tracking the strength of the covenant.​
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Shortly after commencing the work, the employer’s parent announced that it was separately floating the employer’s wider division via an initial public offering. Furthermore, as part of a related restructuring, a bulk transfer was proposed from another DB scheme in the group to create a new section within the scheme we were advising.​

Our solution

We assisted the Trustees to understand how the various transactions would affect covenant strength. We also successfully led a workstream to get a formal information sharing protocol in place with the employer, which would govern the financial data to be provided to the ourselves and the Trustees on a regular basis going forwards.​

The result

​We are now assisting the Trustees in assessing both sections’ covenants regarding their upcoming triennial valuations.