LONDON, Aug 24 (Reuters) - A takeover of Morrisons
by either of its two suitors could "materially weaken" the
security of the supermarket's pension schemes if no additional
protection were agreed, the trustees said in a letter to the
company published on Tuesday.
The British retailer is at the heart of a $9.5 billion
bidding war between U.S. private equity groups Clayton, Dubilier
& Rice (CD&R) and a consortium led by SoftBank owned
Fortress Investment Group.
Last week it backed an offer from CD&R, although its shares
jumped above the 285-pence-a-share bid, indicating the battle
could have further to run.
The trustees of the retailer's two pension schemes said that
whilst the plans were currently in surplus, they remained
dependent on the backing of Morrisons.
They said that support could be weakened by a private equity
buyer, for example by a new owner securing additional debt on
the supermarket's assets, the related increased debt service
burden and possible refinancing and restructuring.
Trustees chair Steve Southern said: "An offer for Morrisons
structured along the lines of the current offers would, if
successful, materially weaken the existing sponsor covenant
supporting the pension schemes, unless appropriate additional
support for the schemes is provided.
"We hope agreement can be reached as soon as possible on an
additional security package that provides protection for
members' benefits."
Morrisons said it placed significant emphasis on the
responsibilities of an owner, including towards its pensions.
It said it would work with all parties to reach an agreement as
soon as possible.
(Reporting by Paul Sandle; editing by Michael Holden)
