FTSE 250 employer

A UK listed UK global engineering firm was approached by a US-based buyer which planned a leveraged acquisition. 

The target had four defined benefit pension schemes which were a material obligation for the group

Role

  • Act for the trustees to help them understand the implications of the transaction for the strength of the covenant
  • Work closely with the respective Scheme Actuaries to ensure any change in covenant was reflected in the technical provisions
  • Negotiate appropriate mitigation for any weakening of the covenant

Results

  • Engaged with the employer and potential acquirers to set out the trustees’ concerns before a binding offer was made under the Takeover Code
  • Advised that the covenant had weakened materially in light of the leveraged nature of the acquisition
  • Worked constructively with TPR and the purchaser’s advisers
     
  • Successfully negotiated parent company guarantees and cash mitigation payments to protect the security of members' benefits

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