Corus appoints E&Y to assess merger

The Corus Dutch Central Works Council (CWC), an advisory body established to promote the interest of Corus Nederland and its workforce, has appointed Ernst & Young (E&Y) to examine the future financial implications of the Tata Steel's acquisition of Corus for $12 billion, the largest by any Indian company in the overseas markets.

The Dutch arm of Corus had sought an advisory opinion of the CWC on the takeover and financing of the acquisition by Tata Steel and consequences to the company. The acquisition established Tata Steel as the world's sixth largest steel giant.

CWC has also asked law firm Holland van Gijzen to look into legal implications of the transaction.

Sources close to the development said the CWC's main concern was continuity of Corus Nederland and it was not in favour of centralisation of services between the British and Dutch activities of Corus Group.

They added that the CWC was concerned about the loan debt surrounding the acquisition and had expressed its concern on a number of occasions about the high interest and debt burdens that the loan would bring about.

The CWC's opinion on the matter would be based on the reports submitted by the two firms.

The CWC has the right to advise on any proposed decision regarding a transfer of control of Corus Nederland. The Dutch Works Council Act allows the Central Works Council to initiate litigation before the Enterprise Chamber of the Amsterdam Court of Appeals if no advice is sought or if the management board intends to proceed with implementing a decision despite receiving negative advice from, or deviating from conditions set by, the council.

A Croup Group spokesperson said the request made to the CWC in the Netherlands by Corus Nederland was routine and part of the process for finalising the financing for the acquisition of Corus by Tata Steel and as part of a wider re-organisation of the companies to maximise the financial efficiency of the new group going forward.

"As in the past, back in 2003 and 2005, Corus Nederland will continue to participate in the financing facilities of Corus. This is similar to the processes carried out in 2003 and 2005, when previous finance facilities were re-organised," she added.

Under the provisions of the Dutch Works Council Act, the CWC has the right to give advice on a number of proposed decisions by the management board of Corus Nederland, including decisions regarding: the transfer of control of the enterprise or any part thereof; the establishment, take-over or relinquishment of control of another enterprise; the termination of the activities of an enterprise or a substantial part thereof; expansion or other change in the activities of the enterprise; a substantial change in the organisation of the enterprise or in the allocation of the authority within the enterprise; and the appointment of an outside expert to provide advice on any of these matters.