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India’s Tata would inject €188m into Corus fund

GLOBAL - Indian steelmaker Tata Steel says it would inject £126m (€188m) into the Corus pension fund as part of its multi-billion pound takeover bid.

Tata said it has held "constructive and satisfactory" discussions with the two main UK pension schemes of the Anglo-Dutch steelmaker, itself the product of an earlier merger between British Steel and Hoogovens.

Tata says it plans "to fund upfront the IAS 19 deficit on the Corus Engineering Steels Pension Scheme by paying £126m into the scheme". It would also increase the contribution rate on the British Steel Pension Scheme from 10% to 12% until March 31 2009.

Tata has offered to buy Corus for £4.3bn, creating the world's fifth-largest steelmaker. But late on Friday the takeover was challenged when 7.9% shareholder Standard Life said the offer undervalued Corus.

Earlier this week, pensions consultant John Ralfe said Tata must be clear about Corus' high pension costs and equity exposure.

The former Boots finance chief who switched the retailer's pension fund wholly into bonds was quoted as saying by Reuters: "Tata think they are buying a steel company but Corus is a hedge fund with a few steelmaking plants on the side."

Corus's pension schemes had total liabilities of £13.8bn pounds last year. About half of all assets of the British schemes were held in equities and the other half in bonds and property, according to Corus's 2005 annual report. The funds since moved to a £208m surplus in June.

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