Corporate adviser - acquirer

A UK subsidiary of a Finnish agrochemicals business was performing poorly and in the absence of additional support was likely to become insolvent with the pension scheme falling into the Pension Protection Fund.  A German industrial turnaround investor was interested in acquiring the business provided the pension scheme risks could be managed.  The transaction would offer the trustees of the scheme the potential for a new much-improved covenant compared with the alternative of admission to the PPF.

Role

• Act for the German acquirer and assess the risks presented by the pension scheme

• Liaise with the trustees to ensure that the value of the proposed covenant was recognised 

• Put in place a funding agreement that provided short term flexibility for the acquirer to support the turnaround process

Results

• The trustees recognised the value of the acquirer's proposal and agreed a suitable funding plan

• The transaction was able to proceed and the UK subsidiary became a solvent employer with an improved covenant

• A claim on the PPF was averted