UK - Cable & Wireless has agreed a demerger settlement which will see its pension provision split into two separate schemes.
The demerger agreement, which completes today, sees Cable & Wireless splitting into two separate listed companies - Cable & Wireless Worldwide and Cable & Wireless Communications - each with separate pension arrangements.
Cable & Wireless has agreed a pensions settlement with the trustees - which involves additional cash injections totalling £30m (US$44.5m) and the provision of a contingent funding agreement for the benefit of each company's main scheme.
Lane Clark & Peacock advised Cable & Wireless on the impact of its demerger on the company's £2bn UK pension liabilities - including setting up the new Cable & Wireless Worldwide scheme.
About half of the existing scheme's assets and liabilities are expected to be transferred into this new scheme. The Pensions Regulator has provided clearance for the pensions aspects of the transaction.
Cable & Wireless director of treasury and corporate finance Roger Burge said: "The demerger has allowed us to create two strong, well-financed companies with great opportunities ahead of them.
"We believe demerger will create further value for shareholders by enabling them to invest directly in Cable & Wireless Communications and Cable & Wireless Worldwide.
"We worked with LCP to ensure that the expected security of any scheme member's benefits would not be adversely affected by splitting the fund between the two businesses. We believe that the agreement we reached with the trustees achieves that objective."
Lane Clark & Peacock partner Jonathan Camfield said: "One of the innovative features of the pensions demerger agreement is the use of contingent funding agreements in order to provide appropriate security for the pension scheme members whilst keeping cash contribution requirements within reasonable bounds."
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