Icahn offers deal to keep T&N fund open

Click to follow
The Independent Online

Federal Mogul, the US car parts manufacturer in Chapter 11 bankruptcy, last night said it had made "much progress" towards avoiding the wind-up of the pension scheme of Turner & Newall, its UK subsidiary, which is also facing potential insolvency.

Federal Mogul, the US car parts manufacturer in Chapter 11 bankruptcy, last night said it had made "much progress" towards avoiding the wind-up of the pension scheme of Turner & Newall, its UK subsidiary, which is also facing potential insolvency.

Union representatives from Amicus and the Trade & General Workers Union flew out to meet the group's main bondholder Carl Icahn on Tuesday, and are due to put out a statement revealing the result of the meeting today. T&N's independent trustee, Alexander Forbes, met with Mr Icahn yesterday, and will also issue an update today.

In a statement yesterday evening, Federal Mogul said the talks had helped air the issues and move the parties towards a mutually acceptable solution. Mr Icahn said: "We presented a proposal that we believe will save jobs of Federal Mogul's UK workforce and avoid a wind-up of the pension scheme."

T&N's pension scheme, which has a deficit of nearly £900m, has some 40,000 members who face losing the vast majority of their retirement income if the scheme is wound up.

Last month, Mr Icahn, the veteran corporate raider who was the inspiration behind the Gordon Gekko character in the film Wall Street, offered to make a payment of £65m to the pension fund in addition to the £7m a year which is currently being paid in.

However, unions and the trustees turned down the offer, saying that the company needed to make payments of £29m a year for the next eight years on top of existing payments if it was to rescue the fund.

Federal Mogul would not confirm whether it had made a better offer to the trustees. However, details of the talks will be unveiled by the unions and trustees today.

Mr Icahn, 68, has a reputation for striking a hard bargain, having made his fortune by taking large positions in insolvent companies and raiding the assets. He is believed to be one of the richest people in the US with a personal fortune of more than £4bn.

Comments