Thyssen asks Tata Steel to find solution to UK pension issue
German steel giant ThyssenKrupp on Friday said Tata Steel would have to find a 'viable solution' for its 'high pension obligations' in the UK before going ahead with their consolidation talks. On a day when UK Steel workers' unions gave their backing to Tata Steel's pension plan in a bid to rescue thousands of jobs, Thyssenkrupp AG Chief Executive Officer Heinrich Hiesinger said talks with the Indian conglomerate are being conducted "with great care".
Stating that the entire steel industry in Europe is fighting for its future, Hiesinger said, "In a situation like this everyone talks to everyone. Among others, we are talking to Tata Steel."
Addressing the company's Annual General Meeting, he further said: "But it still remains open whether, when and with whom such a step in consolidating the industry will take place. Such a step requires thorough preparation. And so we are conducting talks with Tata with great care."
Elaborating on the hurdles that need to be cleared before moving towards a merger with the Indian firm, Hiesinger said: "For example, Tata would have to find a viable solution for its high pension obligations in the UK. Also, any possible joint venture will have to be based on a convincing business plan with corresponding synergies."
Tata Steel had earlier 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 ThyssenKrupp, a media report said.
"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 'The Financial Times'.
The infusion of funds into the 130,000-member pension scheme is aimed at releasing a guarantee the fund holds over the Indian steel major's Dutch assets, the report had said.
The British Steel Pension Scheme (BSPS) 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.
Tata wants to buy out these claims to facilitate a merger of its European business with that of its German rival ThyssenKrupp. UK Steel workers' unions have given their backing to Tata Steel UK's pension plan in a bid to rescue thousands of jobs and allow a merger with German major ThyssenKrupp to go ahead.
Union representatives held a meeting on Thursday to discuss the changes announced, which would see the British Steel Pension Scheme (BSPS) close to future accrual and replaced with a defined contribution scheme.