FRANKFURT (Reuters) – Warship maker TKMS has revised the terms of the design guarantees it receives from parent company Thyssenkrupp, according to a prospectus ahead of TKMS's separate listing, signaling tighter terms as the business prepares for an independent future.
Thyssenkrupp will spin off a 49% stake in TKMS on Oct. 20, it said in a prospectus published late Monday, the latest step in the German conglomerate's ongoing restructuring efforts that highlight the rising value of defense assets.
Thyssenkrupp, the engineering and steel group, has issued TKMS so-called parent company guarantees worth about 10 billion euros ($11.56 billion), which play a key role in protecting the unit's orders.
Until now, Thyssenkrupp has charged a flat annual fee of €85,000 for each guarantee provided by TKMS, resulting in fairly stable annual costs for TKMS of between €13.3 million and €15.3 million in 2022-2024, the prospectus said.
The spin-off and listing are seen as key steps in Thyssenkrupp's strategy to enhance shareholder value while giving TKMS access to capital markets.
TKMS PROVIDED EUR 2.5 BILLION IN BANK GUARANTEES
“In connection with the spin-off, the terms for existing PCGs have been renegotiated, resulting in fixed annual fees payable by us to Thyssenkrupp AG, which are expected to increase year on year,” TKMS said in the spin-off prospectus.
The revised terms will come into force from October 2025. It was not immediately clear how many projects were covered by the guarantee.
TKMS intends to avoid the use of such guarantees in the future and will instead seek other agreements with customers and banks.
TKMS said it has received bank guarantees worth about 2.5 billion euros, which it expects to cover its needs for a year until September 2027.
Brokerage Jefferies believes TKMS shares could trade at around €36.55 per share, based on a valuation of €2.3 billion.
($1 = 0.8652 euros)
(Reporting by Christoph Steitz; Editing by Bernadette Baum)
