ESSEN, Germany (Reuters) - Thyssenkrupp will not be liable for any future funding demands of a new pension scheme sponsored by Tata Steel in Britain, its chief financial officer said, removing a key source of uncertainty in the companies’ planned joint venture.
Tata Steel last month received approval to separate itself from the existing British Steel Pension Scheme (BSPS) through a deal that will cut the scheme’s 15 billion pounds ($20.29 billion) in liabilities.
It wants to underwrite a new pension scheme with lower benefits for members, ridding itself of several billions of pounds in retirement liabilities. The pension liabilities were seen as the main hurdle to a merger of its European steel activities with those of Thyssenkrupp.
The scheme, a successor to the BSPS dubbed BSPS II, will be sponsored by Tata Steel UK and its Port Talbot plant. Thyssenkrupp Chief Financial Officer Guido Kerkhoff said the scheme would be in surplus.
“In case that in the future developments would be that they would be underfunded, then the sponsor would still be Port Talbot, or Tata Steel UK, to overcome this issue,” he told analysts on Wednesday.
“But this is ringfenced in the UK, the other companies are not guaranteeing this.”
The BSPS II will have a 33 percent stake in Tata Steel UK, which will be a unit of a planned 50-50 European steel joint venture of Thyssenkrupp and Tata Steel.
($1 = 0.7393 pounds)
Reporting by Christoph Steitz. Editing by Andreas Cremer.