Edmund Truell’s Pension Corporation on Wednesday said it might allow its £400m ($819m) offer for Telent to lapse if it cannot reach agreement with the new trustees of the company’s pension scheme and the Pension Regulator on key issues such as investment strategy, valuation methodology and risk.
Pension Corporation was on Wednesday granted a one-week extension of the first closing date, which fell on Tuesday.
The first closing date for the offer set a minimum level of acceptances to be received of 90 per cent. If acceptances were less than that at 8am on October 31, and no resolution with the trustees and Regulator has been agreed, the offer will be allowed to lapse, advisers to the Pension Corporation said.
It said it had made no decision as to whether to extend the offer period beyond that date.
Late last Friday, the Pension Regulator replaced trustees to the Telent pension scheme with appointees of his own who cannot be removed by the new owners of the company for a six-month period.
It did so after the original trustees expressed concerns about potential risks to members benefits following a change of ownership of the company. At the time the deal was announced, the trustees said they had not been consulted by the prospective new owners.
In September, Co-Investment Vehicle Number 5 (CILP) and the Pension Corporation made a 600p-a-share offer for Telent in a deal that valued the company at £398m, but which is aimed at unlocking some of the value in the pension scheme of the former GEC-Marconi plan sponsor.
Marconi was sold to Ericsson in 2005. As a condition of that sale, the Pension Regulator required a big cash injection into the underfunded scheme immediately and ordered a £500m cash escrow account to cover possible shortfalls in years to come if the rump of the company, renamed Telent, proved unable to make additional contributions itself.
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