Tata Steel said Monday it had separated the British Steel Pension Scheme from its business, after the UK pensions regulator approved a regulated apportionment arrangement.
The deal was perceived as paving the way for a merger with ThyssenKrupp Steel Europe, with the two having been in talks for some time.
"We continue to be engaged in constructive discussions with thyssenkrupp regarding a potential merger of the steel businesses of the respective companies in Europe," a Tata Steel spokesman told S&P Global Platts.
He reaffirmed there were "no assurances" of a deal being done.
While most analysts and market participants say the European steelmaking sector needs to be more consolidated, workers in Germany and the Netherlands have voiced their opposition to the deal, citing concerns over production closures and job losses.
One source in Ijmuiden said the deal would not be good for the future, especially as Tata has addressed many of the issues facing it -- such as the hiving off of the pension scheme.
Tata said the new scheme would pose "significantly less risk for Tata Steel UK" as it would have lower future annual increases for pensioners and deferred members than the old scheme.
Community Union said Tata Steel UK would have been insolvent without the RAA.
Tata has made a GBP550 million ($727 million) payment to the scheme and the equivalent of a 33% economic equity stake has been made to the British Steel Pension Scheme Trustee under the agreement.
