What does the agreement mean for Tata Steel?
The Regulated Apportionment Agreement (RAA) process is essentially structured around derisking the future of Tata Steel UK to the future volatility of pensions. It is a well thought out process with regulatory support in the UK. It is targeted at ensuring the underlying business is sustainable in future.
What is the value of the 33 per cent stake in Tata Steel UK that will go to British Steel Pension Scheme?
I would put it this way. It is not a value. Rather it is a regulatory compliance under the RAA framework involving Trustees and Pension Protection Fund. It is referred to as the ‘anti-embarassment’ stake. We acted purely on the basis of published principles of the Regulator.
Will a resolution of the pension liability help in the merger talks with ThyssenKrupp?
The deal is fundamentally important and strategically relevant for Tata Steel UK. It aims at reducing the structural volatility of a large pension fund associated with the business. It was a priority for us. While it is not related to the future it will help the UK business in future.
Does this deal bring a finality to pension liabilities and uncertainties in UK business?
Yes, it does. It is part of an overall transformation of the UK business that we had embarked upon one and half years back.
We took a series of operational and strategic steps including the sale of Long Products business, Specialty Steels and pipe mills. We also dealt cut down low-end products mix, unwieldy sites and operational overheads.
The pension deal was also a part of it. We realised had to address it to bring a finality to the restructuring. It is the biggest thing we have done under the UK restructuring process. And, I think we have been fair and responsible in addressing it.