Warship maker TKMS has renegotiated the terms of project guarantees it receives from parent company Thyssenkrupp, according to a prospectus released ahead of TKMS’s separate listing, signalling tougher conditions as the business prepares for a stand-alone future.
Thyssenkrupp will spin off 49 per cent of TKMS on October 20, the prospectus published late on Monday said, marking the latest step in the German conglomerate’s restructuring efforts that underline the growing value of its defence assets.
Thyssenkrupp, an engineering and steel production group, has issued so-called parent company guarantees worth around €10 billion ($11.56 billion) to TKMS, which are key in safeguarding the division’s contracts.
So far, Thyssenkrupp has charged a fixed annual fee of €85,000 per guarantee provided to TKMS, resulting in fairly stable annual costs for TKMS between €13.3 million and €15.3 million in 2022–2024, the prospectus said.
The spin-off and listing are viewed as key steps in Thyssenkrupp’s strategy to unlock shareholder value while providing TKMS with access to capital markets.
“In connection with the spin-off, the terms for existing PCGs have been re-negotiated, resulting in fixed annual fees, payable by us to Thyssenkrupp that are expected to escalate year over year,” the TKMS spin-off prospectus stated.
The renegotiated terms will take effect from the 2025 financial year beginning in October. It was not immediately clear how many projects are covered by the guarantees.
TKMS said it intends to avoid relying on further such guarantees and will instead seek other arrangements with clients and banks. The company has secured commitments for about €2.5 billion in bank guarantees, expected to cover its needs through September 2027.
Brokerage Jefferies estimates TKMS shares could trade at around €36.55 apiece, based on a €2.3 billion valuation.
(Reporting by Christoph Steitz; Editing by Bernadette Baum)
