Tata Steel Sees UK Pen­sion Deal Soon

Pact may pave way for merger of co’s Europe busi­nesses with Thyssenkrupp

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

Kolkata: Tata Steel is hope­ful of “shortly” reach­ing a fi­nal agree­ment on a deal to sep­a­rate its UK pen­sion scheme from its busi­nesses, a de­vel­op­ment that could pave the way for po­ten­tial merger of its Euro­pean busi­nesses with Ger­man steel pro­ducer Thyssenkrupp.

While Tata Steel and Thyssenkrupp have been in talks to merge their Euro­pean steel busi­nesses for nearly a year, ex­perts be­lieve Tata Steel’s £15-bil­lion Bri­tish Steel Pen­sion Scheme (BSPS) has been a ma­jor stum­bling block.

A Tata Steel spokesman in the UK told ET that the par­ties in­volved in the pen­sion deal are in “pos­i­tive dis­cus­sions and we are hope­ful of reach­ing a fi­nal agree­ment shortly”. Me­dia re­ports in the UK on Wed­nes­day had said Tata Steel could be days away from a deal on its pen­sion scheme. Tata Steel UK and the BSPS trustee had in prin­ci­ple agreed on key com­mer­cial terms of a Reg­u­lated Ap­por­tion­ment Ar­range­ment (RAA) in May. The RAA is sub­ject to for­mal agree­ment by the Pen­sion Reg­u­la­tor and non-objection by the Pen­sion Pro­tec­tion Fund, and in­di­vid­ual en­ti­ties that would be party to the RAA.

“These par­ties are in pos­i­tive dis­cus­sions,” the com­pany spokesman said. “When­ever there are sig­nif­i­cant de­vel­op­ments in our busi­ness, we al­ways pri­ori­tise in­form­ing our em­ploy­ees first,” he added.

Tata Steel UK has of­fered to pay £550 mil­lion into its now­closed pen­sion scheme and give the fund a 33% stake in its UK busi­ness.

About 6,250 peo­ple are em­ployed by Tata Steel across Wales, in­clud­ing 3,500 in Port Tal­bot.

Com­ment­ing on the sig­nif­i­cance of the pen­sion deal, Koushik Chat­ter­jee, group ex­ec­u­tive di­rec­tor (fi­nance, cor­po­rate & Europe) at Tata Steel, had told ET in May: “It is our big­gest pri­or­ity and we need to solve it in a ro­bust man­ner. Only then can we think of all other strate­gic is­sues.”

On Thurs­day, a Reuters re­port from Frank­furt quoted Thyssenkrupp CFO Guido Kerkhoff say­ing that the firm will not be rushed into any deal with Tata Steel. “Just be­cause you might read at some point that Tata has a deal it doesn’t mean we can stand up a week later and say, ‘Now we have a joint ven­ture.’ It can­not work that way,” he said.

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