LONDON (Reuters) - A takeover of Morrisons by either of its two suitors could "materially weaken" the security of the supermarket's pension schemes if no additional protection were agreed, the trustees said in a letter to the company published on Tuesday.
The British retailer is at the heart of a $9.5 billion bidding war between U.S. private equity groups Clayton, Dubilier & Rice (CD&R) and a consortium led by SoftBank owned Fortress Investment Group.
Last week it backed an offer from CD&R, although its shares jumped above the 285-pence-a-share bid, indicating the battle could have further to run.
The trustees of the retailer's two pension schemes said that whilst the plans were currently in surplus, they remained dependent on the backing of Morrisons.
They said that support could be weakened by a private equity buyer, for example by a new owner securing additional debt on the supermarket's assets, the related increased debt service burden and possible refinancing and restructuring.
Trustees chair Steve Southern (NYSE:SO) said: "An offer for Morrisons structured along the lines of the current offers would, if successful, materially weaken the existing sponsor covenant supporting the pension schemes, unless appropriate additional support for the schemes is provided.
"We hope agreement can be reached as soon as possible on an additional security package that provides protection for members' benefits."
Morrisons said it placed significant emphasis on the responsibilities of an owner, including towards its pensions. It said it would work with all parties to reach an agreement as soon as possible.