T&N rejects Icahn's £71m cash offer

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The Independent Online

The pension scheme trustees of Turner & Newall - the UK car parts manufacturer whose US parent Federal Mogul is in Chapter 11 - finally made a formal rejection of the offer of a £71m cash injection from the group's major bondholder yesterday, increasing the likelihood of the fund being wound up.

The pension scheme trustees of Turner & Newall - the UK car parts manufacturer whose US parent Federal Mogul is in Chapter 11 - finally made a formal rejection of the offer of a £71m cash injection from the group's major bondholder yesterday, increasing the likelihood of the fund being wound up.

T&N's pension scheme, which has about 40,000 members, has a deficit of some £875m, which the parent company is unable to plug.

If the scheme is forced to wind up, its members face losing the majority of their pension savings, and have no guarantee of receiving compensation from the British Government.

The scheme's independent trustee, Alexander Forbes, as well as UK unions, met Federal Mogul's main bondholder, the US financier Carl Icahn, earlier this month, to try to persuade him to allow more money to be attributed to the ailing fund.

However, in a statement yesterday, the trustees revealed that not only had Mr Icahn failed to increase his original offer, he had tried to add extra conditions. The statement said: "After very careful consideration of all the issues, the trustees have concluded that they are not able to recommend to the court that the offer of $130m (£71m) is accepted."

The rejection could throw a spanner in the works of Federal Mogul's attempt to emerge from Chapter 11 bankruptcy protection before the end of the year. A hearing is scheduled for the end of this year at which the T&N pension fund trustees' vote could be crucial to securing a successful return to solvency.

In yesterday's statement, the trustees said they had applied to the High Court for guidance on how to vote in the meeting. But they are expected to vote against the move out of Chapter 11.

The UK administrator, Kroll, is considering selling T&N in the hope of achieving a better result for pension scheme members.

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