Silver goal

6 July 2004

Trustees may be worried that a leveraged bid could increase the risks of a pension scheme already in deficit. If Green can’t convince the trustees he is someone they can work with, he will have trouble drafting a firm bid.

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Philip Green said he has received a letter from David Norgrove, chairman of Marks & Spencer's pension fund trustees. This informed Green that the trustees will meet to consider their position in response to Green's request for a meeting with them

Green wants greater clarity about the scheme's liabilities. He said that "if M&S has agreed a future funding plan at the time when the funds were injected or since ... it should be disclosed now". Green is also expected to ask trustees about their powers to determine the company's contribution rates and what they might do in case of a change of control.

M&S's annual report shows that in April it had a deficit of £670m, calculated under FRS 17. CSFB was appointed to give financial advice to the pension fund trustees, and Smithfield Financial was chosen as a public relations adviser.

Green has been told by the Takeover Panel that he has until August 6 to make a firm bid for M&S. Otherwise, he will have to withdraw for six months.

Permira, the private equity fund, has abandoned talks with WH Smith about making a bid for the retailer after the fund trustees asked for upfront cash to secure the fund's deficit.

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