UK/NETHERLANDS - Dutch paints giant, Akzo Nobel will pay at least €1bn into its UK subsidiary's pension fund, the firm has said.
Some of the proceeds of the initial public offering of Akzo Nobel's pharmaceutical unit in the coming weeks will go to the UK scheme, spokesman Tim van der Zanden told IPE.
The company is actively looking to sell its entire pharmaceutical unit, consisting of human health care division Organon, and veterinary medication company, Intervet.
Their expected price is €8-10bn.
Chief financial officer, Rob Frohn told Dow Jones Newswire: "Our pension fund in the UK has a large deficit and we will need to make that right. This year this will mean a cash burden of several hundreds of million euros."
Van der Zanden declined to disclose the exact amount to be injected this year.
Van der Zanden also told IPE that the company will start discussions with the UK pension fund trustees about changing the structure of the fund and its asset allocation.
Over the coming five to ten years the company will try to eradicate the fund's deficit, which is estimated at between €1bn and €1.5bn.
The firm concedes that the deficit is a problem. "This is not an urgent problem, but nonetheless a problem, which we have had for years," Van der Zanden said.
An aggressive investment strategy in the UK, where around 80% of the assets under management were in equities between 2001 and 2003, led to the deficits.