UK - Marconi will make a £185m cash injection to its UK pension plan and set aside a further £490m, if the planned £1.2bn sale of its telecommunications equipment and international services businesses to Ericsson goes ahead.
The telecommunications company has said the £185m contribution, agreed following discussions with the trustee and the Pensions Regulator, will be sufficient to eliminate the deficit in it UK pension plan, estimated to be approximately £141m by the latest actuarial valuation, carried out at 5 April 2005.
The additional £490m will be retained in an escrow arrangement for the future benefit of the UK plan.
John Devaney, chairman of Marconi said: “The proposed Ericsson transaction enables us to take steps towards resolving our UK pension plan issue, whilst protecting the benefits of the 69,000 members of our plan.”
The £185m cash injection must be made before the proposed ‘return of cash’, expected to take place in the first quarter of 2006, in which the board intends to return cash to Marconi’s shareholders at a proposed rate of 275 pence per ordinary share, approximately £577m in total.
This sum, it said, was equivalent to the Marconi share price as at 5 August 2005, the last business day before it confirmed it was in discussions with third parties about potential business combinations.
If the transaction is completed, Marconi will assume a new moniker, telent plc, and retain its listing on the London Stock Exchange, acting as Ericsson’s preferred services partner in the UK.
If it does not proceed, the trustee has said it would still seek a significant immediate payment to the UK pension plan to address the deficit.
UK manufacturing union Amicus had strong words for Marconi’s management. Peter Skyte, national officer for IT, said: “Whilst it marks the end of an era for the Marconi brand and name, we hope it also marks the end of monumental mismanagement, excessive corporate greed and catastrophic job losses.”
A spokesman for Marconi replied: ”This is the best deal for all stakeholders involved, our shareholder, customers and employees. This will secure the pension scheme...and also allow employees to have a brighter future.”
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