London, Jan. 13 (PTI): Tata Steel has offered to pay "hundreds of millions" of pounds to its 130,000 member-strong pension scheme in the UK to facilitate a merger of its European steel business with German steel giant ThyssenKrupp, a media report said today.
"We are in meaningful negotiations with the company (Tata Steel) now. We've had an improved offer for the release of the security package," Allan Johnston, chairman of the pension scheme's trustee board, was quoted as saying by The Financial Times.
The infusion of funds into the pension scheme is aimed at releasing a guarantee the fund holds over the Indian steel major's Dutch assets.
The British Steel Pension Scheme has a guarantee over Tata Steel's Ijmuiden plant in the Netherlands, which provides financial protection for the scheme by giving its trustees a right over the assets in certain circumstances.
The Tatas want to buy out these claims to facilitate a merger of its European business with that of its German rival ThyssenKrupp.
Tata Steel wrote to the UK's Pensions Regulator this month, attempting to demonstrate that its UK subsidiary was close to insolvency, Johnston said.
This is a pre-requisite for obtaining a regulated apportionment arrangement, a rarely used mechanism aimed at helping financially distressed companies by freeing them of retirement obligations.
"We continue to have discussions with the employer and the trustees about the future of the British Steel Pension Scheme. There are still significant issues to be resolved and we will consider any proposals carefully in light of their impact upon the 130,000 pension scheme members and PPF levy payers," the Pensions Regulator said.
Tata Steel had reached an agreement with trade unions at the end of last year to invest in its UK business.
Tata Steel director
Tata Steel today announced the appointment of N. Chandrasekaran as an additional director of the company with immediate effect. He has been appointed chairman of Tata Sons.
"The nomination and remuneration committee met on January 13 and unanimously recommended the induction of N. Chandrasekaran as a member of the board," Tata Steel said in a BSE filing.
