Asia > Southern Asia > India > The Indian steel behemoth has offered to provide 550m to the British Steel Pension Scheme.

India: The Indian steel behemoth has offered to provide 550m to the British Steel Pension Scheme.

2017/05/18

Tata Steel is one step closer to securing a merger transaction with Thyssenkrupp next agreeing to settle its pension scheme liabilities. Tata Steel has offered £550m ($711m) to the British Steel Pension Scheme (BSPS) on Wednesday (17 May). BSPS will as well acquire a 33% stake in the Indian firm's UK businesses.

Tata Steel as well reported an Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) all of £230m for its UK operations for the fourth quarter of 2017, the highest figure since 2008. A additional competitive regional stance, along with an improving sales mix, and additional favourable market conditions were credited for the increase. The figures were released as part of the company's earnings statement on Tuesday.

Tata Steel's pension liabilities have been a sore point that slowed merger talks with German Thyssenkrupp, putting over 8,000 British jobs at risk within the steel industry, according to a statement by The Guardian.

The latter refused to proceed with a merger agreement until Tata Steel's pension liabilities were resolved. Tata Steel has been involved in ongoing discussions with the BSPS, the Pensions Regulator, and the Pension Provident Fund (PPF) over the settlement of liabilities.

The Indian steel giant has as well proposed to sponsor an alternative pension plan, called the New Scheme. Employees would have the choice of opting for either the New Scheme or the PPF. The New Scheme would have lower next annual increases for pensioners and deferred members than the BSPS.

The firm's European operations witnessed stagnated increase in liquid steel production and in general deliveries during the fourth quarter of 2017.

Shares of Tata Steel surged by 9% during midday trading hours.

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