The pensions of 40,000 workers at Turner & Newall came a step closer to being saved last night, after unions and administrators gave their backing to a rescue package from the company's billionaire bondholder.
It is now in the hands of the independent trustees of the pension scheme to accept the offer put forward by Carl Icahn, the main bondholder in Federal Mogul, T&N's bankrupt US parent. The trustees will decide whether the offer is sufficient to meet current obligations.
Federal Mogul's creditors, led by Mr Icahn, have pledged funding of $25m (£14m) to the pension scheme per year until its £300m deficit has been cleared. Pension scheme funding laws in the UK are about to change, and the company has also promised to increase the £14m contribution in line with the new laws.
Representatives of Amicus, the Transport & General Workers' Union, the GMB and Kroll, the administrator of T&N, met yesterday to discuss the proposal and believe it may save the scheme from winding up. It would need £875m to fully pay all the pension rights of its members in one go, and without it, thousands of members would stand to lose up to 70 per cent of their promised pensions. Already retired workers could also have seen their income levels in jeopardy.
"The unions are satisfied that in principle the deal is workable and understand that the administrators, Kroll, will be working with the independent trustee to resolve some issues that have arisen from the proposals," a statement from the unions said.
The promise of ongoing commitment from Mr Icahn, described as a Gordon Gekko-style corporate raider, marks a step change from his original stance. His previous offer to the scheme was for a one-off payment of $130m. Members would have had to hope that returns from equity investments would fill the rest of the shortfall. But a spokesman for the trusteesurged caution on the proposals. He said: "We welcome the offer and will consider it seriously to establish whether it will be in the best interests of the members."
There are concerns that Federal Mogul, which is going through bankruptcy proceedings in the US in the face of huge asbestos claims from former employees, may not be able to provide sufficient guarantees to the pension scheme to be able make the payments. The trustees will want a cast-iron promise that Mr Icahn does not walk away from the scheme.
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