Boots pension fund trustees have been advised by lawyers Ashurst and Sackers that they will be able to use a June 21 court hearing that is due to approve a takeover by KKR as an opportunity to oppose the deal.

The trustees had been unable to reach a deal with the American private equity firm over the handling of Boots’ £305 million pension fund deficit.

They began to examine the possibility of court action last week as talks dragged on and sought advice from their lawyers on whether last-ditch legal action would be possible. A court hearing has been set for June 21 to approve the takeover through a scheme of arrangement, whereby Alliance Boots would cancel its share capital and transfer its assets to KKR.

The court hearing is compulsory, since a judge has to ascertain that all creditors are being fairly treated but no pension fund has ever made representations at such a hearing before and the legality of such a move is unknown.

The pension scheme, which has 66,000 members, including 16,000 employees who are making contributions, is a major creditor. However, lawyers acting for the trustees told them yesterday that it would be possible to go ahead.

KKR and the trustees are set to meet on Monday or Tuesday next week in a final attempt to thrash out a deal and are under heavy pressure from the pensions regulator to reach an agreement.

The trustees will take a decision on whether to press ahead with court action after those meetings.

It is thought they must make up their minds by the end of next week to file papers with the court to give the judge time to consider their representation ahead of the June 21 hearing.

KKR, and its bidding partner Stefano Pessina, have offered a £940 million package to support the scheme but the two sides continue to argue over the amount of cash required and the timetable for payments.

The private equity firm is understood to have proposed setting up an emergency fund of £600 million and then paying £340 million into the scheme over ten years and the trustees are understood to want about £100 million more than they have been offered.

Representatives from both sides met yesterday and are continuing to wrangle over the actuarial details of the Alliance Boots fund.

A spokesman for KKR said: “We are very disappointed. Both sides are ostensibly working together to achieve a fair outcome and in our internal meetings they have never disclosed this option. We continue to hope that both sides work together to achieve a sensible outcome.”

The Alliance Boots board is also thought to be exerting pressure on both sides to come to an agreement. The company’s directors have come under fire from employees and shareholders for failing to ensure the future funding of the pension scheme before agreeing to a deal with KKR.

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