UK - Federal Mogul has criticised the independent trustee of the Turner & Newell pension scheme for rejecting a $130m (£71m) offer to top-up the fund.
Owners of the beleaguered US car component giant - principal bondholder Carl Icahn and asbestos creditors - said they were ”surprised and disappointed” that Alexander Forbes, the independent trustee of the firm’s UK arm, had rejected the offer.
The decision follows a meeting in New York on August 11 aimed at reaching a settlement to fund the pensions of some 40,000 T&N workers, whose benefits are at risk due to the scheme’s estimated £875m shortfall.
FM said the proposal was ”better than any available alternative” and would leave the scheme well funded.
Its statement said: “Under the proposal, the scheme would be 88 % funded better than many pension schemes in the UK today are and the scheme would have the opportunity to benefit from future stock market growth and increases in interest rates.”
It added that FM would also have set up a new defined contribution scheme for existing employees.
However, Alexander Forbes said the offer did not meet the level of contributions required to “enable the scheme to continue for the benefit of the UK employees on the same basis as in the past”.
T&N administrator Kroll will now look at either restructuring or selling off the UK business in order to receive a dividend that could be more generous than the offer from FM.
Kroll estimates the business to be worth around $1.5bn (£837.2m) but FM has put its value at just $500m (£276.7m).
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