Melrose has put on hold plans to sell one of its American subsidiaries for $800m from which funds were marked for the GKN pension scheme.
According to a report in The Times yesterday, 27 August, the aerospace giant has put on hold plans to sell Ergotron, a maker of equipment for schools and hospitals, due to the illness of its chief executive, in a move that jeopardises the future funding of the GKN pension fund.
The firm purchased GKN earlier this year in a fractious takeover, in which the American company agreed to pay a £1bn package for the pension schemes, which has 32,000 members.
A Melrose spokesperson said the initial agreement made with the pension trustees still stands.
“During the GKN bid process Melrose agreed a formula with the pension fund trustees where a portion of proceeds from the sale of any assets would go to the pension fund. A total of £1bn was pledged and that pledge stands,” it said.
As part of the deal, Melrose pledged to sell of its existing businesses in order to plug the £1bn pensions deficit.
The group is expected to publish a trading update in the first week of September.
In March, the £8.1bn takeover was approved in order to “create a UK industrial powerhouse”.