UK - The escrow account set up to assist the £2.7bn (€3.9bn) former Marconi pension fund after the company was broken up has emerged as a key factor in a new takeover bid.
Telent, effectively the rump of the old GEC/Marconi business, is the subject of conflicting takeover bids from Fortress Investment Group's Holmar and Polygon Investment Partners, with its pension assets seemingly a pawn on the negotiating table.
It will all come to a head at an extraordinary general meeting this Friday.
Telent said today it wants to ensure that the "circumstances surrounding" the £490m currently held in the escrow account for the pension fund are understood. And it wanted to explain why it "believes there will be no early release of such funds back to the company".
It said the account was put in place following its disposal of its equipment and international services businesses to Ericsson last October - partly to "ensure that the pension plan could meet its obligations over the long term".
"The board's view is that any release of funds from the escrow account to Telent could not happen for many years and may never be possible."
It pointed to legal restrictions relating to the account.
"Under the legally binding terms governing the escrow account, the funds in the escrow account can only be released to Telent if either the total of the pension plan assets and the escrow account exceed 105% of the 'buy out value' of the fund or if a buy out has been completed and surplus funds remain in the account."
"At present, the board has been advised that a buy out of the pension plan would cost in the region of £3.7bn which means that a release from the escrow account would only be possible if the cost of a buy out reduced by more than £500m."
But despite nine months of exploring this and other options there is now "no realistic prospect of this happening in the medium term".