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Tata Steel gets regulatory approval for UK pension deal

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(Reuters) - India's Ltd has received regulatory approval for a deal to cut its pension scheme liabilities, it said on Friday, paving the way for a possible between its British and European businesses and those of Germany's Thyssenkrupp.

The deal "represents the best possible structural outcome for the members of the British Pension Scheme and for the business," Koushik Chatterjee, Steel's group executive director, said.

The net financial impact of the deal would be reflected in Steel's second-quarter financial results, he said.

The fate of Tata's British businesses, including the UK's largest steelworks, at Port Talbot in Wales, has been uncertain since said more than a year ago it planned to sell the British assets following heavy losses.

Without a deal on the pension scheme, had warned it could face insolvency due to the size of the pension fund's deficit.

The pension scheme's 15 billion pounds ($19.37 billion) of liabilities also appeared to be the main obstacle in the talks with Thyssenkrupp, which has been opposed to taking them on.

Thyssenkrupp said on Friday it would still not rush into any decisions. The prospect of a has also met with opposition from Thyssenkrupp's German labour unions.

"Thyssenkrupp had already in the past pointed out that any (pensions) agreement would need to be closely examined," a spokesman for the German steel-to-elevators group said.

"We will now take the time necessary for that examination."

Under the terms of the deal with The Regulator, will pay 550 million pounds ($713 million) into the British Pension Scheme and will also give one of Britain's largest final salary pension schemes a 33 percent equity stake in Ltd.

The terms are in line with those outlined by earlier this year.

When the new agreement comes into effect, the pension scheme will be separated from and a number of affiliates, the company said. (http://bit.ly/2vt3uAD)

The deal makes the 130,000 members of the scheme automatically eligible to join the Pension Protection Fund (PPF), an industry-funded lifeboat for ailing schemes, which offers lower guaranteed benefits than the existing terms.

However, plans to sponsor a new pension scheme with lower benefits than the old scheme but better ones than the PPF.

That scheme could take some months to set up but should not stand in the way of any tie-up between and Thyssenkrupp, pension industry sources say.

The British Pension Scheme said it would write to its members in the next few weeks about the new scheme.

"We'd encourage members to consider the details and their position carefully and decide whether the new scheme or the PPF is the better option for them," a PPF spokesman said.

($1 = 0.7711 pounds)

(Reporting by Samantha Kareen Nair in Bengaluru, Carolyn Cohn in London, Christoph Steitz in Frankfurt and Tom Kaeckenhoff in Duesseldorf; Editing by Greg Mahlich)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, August 11 2017. 19:28 IST
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