As a result of the separation, achieved through a regulated apportionment arrangement (RAA), Tata Steel will pay £550m to BSPS, which will also be given a 33% equity stake in the steel company. With the support of the Pensions Regulator and the Pension Protection Fund (PPF), a new BSPS will be created after an assessment period.
Slaughter and May advised long-standing client Tata Steel on the restructuring, with pensions and employment partners Charles Cameron and Phil Linnard, restructuring partner Ian Johnson, finance partner Andrew McClean and M&A partner Padraig Cronin comprising the team. PwC also represented Tata Steel.
The BSPS trustee has been a Travers Smith client for ten years, and the firm represented it on the restructuring with a team that included pensions partners Paul Stannard, Dan Naylor and Susie Daykin, finance partners Jeremy Walsh and Ed Smith, corporate partner Adrian West, tax partner Richard Stratton and derivatives partner Jonathan Gilmour.
The separation of the BSPS had been seen as a barrier to a potential merger of Tata Steel with Germany's ThyssenKrupp, but the separation may now accelerate merger discussions.
In a statement, Tata Steel's group executive director Koushik Chatterjee said: 'Considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the RAA presents the best possible structural outcome for the members of the British Steel Pension Scheme and for the Tata Steel UK business.'
The PPF, which was represented by Hogan Lovells, said in a statement: 'Members of the British Steel Pension Scheme will have seen a lot of speculation about the future of their pensions, so we want to reassure them the PPF is there to protect them throughout this process.'
Slaughter's Cameron added: 'This restructuring is unusual in a number of ways, and unprecedented in its scale. It is by far the largest pension scheme restructuring carried out in the UK.'
In April 2016, Forsters lined up opposite Slaughter and May on Tata Steel's deal to sell its European long-products business to UK investment house Greybull Capital.
This article first appeared on The Lex 100's sister publication, Legal Business.